Two stories today:

Firstly, there’s this delightful violation of direct government intervention from my own neighbourhood:

Governors of Nightingale Primary School removed by Education Secretary

Education Secretary Michael Gove today removed Nightingale Primary School’s board of governors after they refused to bow to pressure to become a sponsored academy.

The board was told this morning it would be dismantled and replaced with an interim governing body, which includes Deborah Absalom [the former director of children and young people’s services at Conservative-run Bexley Council] as its new chair…

I’m not sure that Gove has the constitutional power to remove the boards of individual schools, but what I do know is that the decision to go down the academy route is one that should be made at the institutional level by the internal democratic bodies of individual schools. This kind of muscular involvement is chilling as an isolated event. However…

Doctor who criticised NHS reforms is threatened with disciplinary action

Andrew Lansley, the health secretary, has been accused of “bullying” NHS staff who speak out against his NHS shakeup after a senior doctor who signed a letter criticising the proposed changes was threatened with disciplinary action.

The doctor has been told to attend a disciplinary hearing later this week by the NHS primary care trust (PCT) that employs him. It claims he breached the NHS code of conduct by airing his concerns.

Two such stories in 24 hours must surely be a coincidence! But not really. The government’s tactics on the NHS bill – such as only consulting with bodies that already agree with it – have always been shady at best, and this kind of strong-arm bullying is the natural end result of a process that has largely failed to convince anybody at all.

As the parliament goes on, and divisions between the coalition partners widen; and as the limited policies of austerity that have attracted consensus get enacted one by one, leaving only controversial measures that are subject to competing principles and agendas, the Tories will find it harder and harder to achieve their policies through debate and persuasion. I am concerned that this is a presentiment of the kind of tactics we can expect from the government going forward.

Following on from last week’s post on Zomia, I came across the following:

Seen from the state centre, this enclosure movement is, in part, an effort to monetise the people, lands, and resources of the periphery so that they become, to use the French term, rentable… The objective has been less to make them productive than to ensure that their economic activity was legible, taxable, assessable, and confiscatable or, failing that, to replace it with forms of production that were.

This strikes me as being fundamentally true, and gets to the heart of why empire lead to modern capitalism. But it also reminds me that the internet represents a new frontier in that effort; the growing online black markets are unacceptable not because they subvert a status quo, but because they cannot be integrated. Legislative efforts to curb online freedom are the logical response of a system of government that has profound cultural homogenisation at its ideological core.

Zomia.

Zomia is a political and geographic oddity first remarked upon by a Dutch historian, Willem van Schendel, in 2002. Loosely speaking, it refers to a massive, octopus-shaped tract of land in south-east Asia that is the subject of increasingly heated academic attention.

The map above is wrong – not only is the extent of the shaded area quite arbitrary in places, it mislabels Tajikistan as Uzbekistan – but it is presented here as illustration.

Zomia is a huge territory, conceived as being the largest contiguous area that, despite falling beneath the aegis of various national governments, is essentially beyond their control. The exact boundaries are inevitably imprecise, given that they shift with national priorities and the ability of central governments to exert power, but certainly the highlands set away from the coast of Vietnam, all of Laos, most of Thailand, the Shan Hills of northern Burma, and the mountains of Southwest China are all functionally lawless, and the famously unstable regions of Kashmir, the Federally Administered Tribal Areas of Pakistan and the areas on either side of the Durand line can be said to extend this further.

Zomia is, of course, a metaphor. It does not describe a physical reality in the way that a national border does. While it is fair to assert that the area under attention is characterised, broadly, by a territorial ambiguity and general lack of statehood, giving it a name and a border ascribe a coherence to it truthfully lacks. Frank Jacobs at the NYT piece linked to above falls into that trap, using Zomia to illustrate a point about modernity and its discontents. Joshua Foust takes issue:

Unless one equates modernity with answering to a central government you did not choose, this is all wrong… the idea that these transitional regions resist their governments because they reject modernity is nonsense. Afghanistanis and Pakistanis do not reject modernity writ large: they love running water and sanitation and schools and iPhones and electricity and the Internet. Even the Taliban enjoy and appreciate these aspects of modernity. What they are rejecting is a government they view as abusive and unrepresentative. Moreover, most Afghans still identify as Afghans, even (or perhaps especially) when explaining why they reject rule-by-Karzai. So it’s not as simple as rejecting a national identity or modernity.

But while the metaphor can be over-applied, there is a real truth on the ground that is interesting and worth discussion. In his book, ‘The Art of Not Being Governed: An Anarchist History of Upland Southeast Asia,’ James Scott describes Zomia as “the largest remaining region of the world whose peoples have not yet been fully incorporated into nation-states,” and that’s a much fairer – albeit narrower – point. The idea of an area that is beyond the reach of a central government may feel anachronistic, but in truth the Western idea of a government with total reach is a relatively modern historical oddity. There are still other parts of the world where borders are notional – think of the Western Sahara, or parts of Latin America. Zomia represents a way of life that is dying out – an area that is not anti-modern, just ruggedly regionalist. Foust again:

The idea of a lawless region as an object of analysis is fraught with issues. These regions are not “lawless,” as Jacobs calls them. They just operate under different laws that are neither drafted nor enforced by the state. The tribal areas of Pakistan, for example, actually follow a long-established pattern of competition between local and central methods of control. Similarly, Southwest Kyrgyzstan isn’t rejecting modernity by any stretch, it is just coming under the control of mafia dons who have taken up high-level positions in the local and regional government. It’s not lawless, it’s just a different kind of law, however un-ideal and crappy.

This:

The racially-charged Super Bowl commercial put out by former Rep. Pete Hoekstra featuring an Asian actress speaking broken English has backfired and hurt the Michigan Republican’s campaign for U.S. Senate, according to a new poll on Tuesday.

[...]

In July, Hoekstra’s favorability rating was 31 percent favorable, compared to 30 percent unfavorable (+1). It now stands at 28 percent favorable and 38 percent unfavorable (-10).

While it is generally not unfair to suggest that electorates have been making increasingly poor choices for the last 40 odd years, it is nevertheless clear that no-one thinks less of voters than politicians.

February 3rd was the thirtieth anniversary of a massacre, carried out by Hafez al-Assad, on the people of the Syrian city of Hama. 20,000 people were killed in a protracted artillery bombardment, which also flattened a historic and beautiful city centre. Thirty years later, and the Assad regime is still in power in Syria. The face has changed – Hafez’s son, Bashar, inherited rule after his father’s death in 2000 – but the tactics are still the same. So far over 7,000 people have been killed since the beginning of the uprising, and the regime is becoming more brutal, rather than less. While violence may erode a ruler’s credibility to retain power, it rarely erodes their capacity to do so. A committed ruler with a loyal army can ignore discontent for a surprising amount of time.

The Arab Spring (which, incidentally, has claimed no Arab scalps; perhaps calling it the Maghreb Spring would be more accurate) was a bizarrely rare one-off. Western media got caught up in the idea that a sufficiently commited population can overthrow any dictator, but there’s plenty of counterfactuals to that – China, Iran, Zimbabwe, Libya, and North Korea, to name but a few.

Assad has a few things in his favour that suggest that he may be in this privileged majority. The Army of Syria is not independent, as it is in Libya and Tunisia; it was set up by Assad Snr and its upper echelons are packed with loyalists, loyal to the family more than the regime. The resistance hopes for rank and file desertions, but entropy has been slight thus far and there’s no reason to suspect that it will quicken. That alone is enough – as long as Assad has might, he can reign.

Russia will almost certainly continue to support the regime. Russia has a naval base at Tartus and won’t throw that away lightly. As long as Russia continues to veto international action, China will join it, to give credence to a counter-western voting block.

The international community, for that matter, has nothing. No more room for sanctions, no will to act unilaterally, no capability to overturn Russian intransigence. Syria reflects the West’s impotence back upon itself and gets away with it. The Syrian airforce hasn’t taken off so they can’t use the no-fly zone excuse again. And the longer it goes on, the more it gets normalised. While there are some limited options – like arming the rebels, flooding the region with guns and destabilising it for decades to come – they are almost all awful. So change probably won’t come from without.

The Syrian Resistance is a mess; the Libyian Liberation was co-ordinated by NATO, and without that the guys in Syria are basically an aimless mob.

The Syrian population is too fractured to unify. Syria is a tribal, sectarian country, and the protests are being led by the repressed Sunni majority. Not only do the country’s other factions fear reprisals if the Sunnis regain power, they increasingly fear that Syria’s secularism and pluralism will be under threat from a hardline Wahabist influence. Somewhere between a half and a third of the country will not support a Sunni rebellion under any circumstances.

Taken together, it appears that the ingredients to see the regime deposed just aren’t there.

News International, through its Management and Standards Committee, is now being ruthless and commercial in dealing with the alleged wrongdoings of all its British titles. In doing so, News International is showing no more sentimental attachment to its reporters than it did thirty years ago to its print workers. It is akin to when a despot withdraws his favour from certain underlings: they are not “thrown to the wolves” but they suddenly are treated like any other subjects, and they then have to account for their actions when they thought they could get away with it.

David Allen Green in the New Statesman.

Greece has a self-image as a country that says “no”. On October 28th every year the country celebrates “no day” (oxi day), remembering the occasion in 1940 when General Ioannis Metaxas refused to allow the Italians and Germans to occupy Greece without a fight. This brought Greece into the war – in fact, for a while in 1940 Greece was Britain’s only ally, and the Greek armed forces (which had been expected to simply roll over and accept subjugation) met with some early substantial successes, rolling the Axis powers quite some way back into Albania. Greece’s small army didn’t stand a chance in the long term, and the country was occupied from 1941 until the end of the war, but that moment of stubbornness was internalised as a national truth.

National identify can inform the behaviour of its citizens. Greek students have always been a bolshy lot – the University of Athens has long been a stronghold of the Greek Communist Party, the unions are punchy, and protests (bordering on the riotous) are a common fixture of the streets around Syntagma Square, the seat of Greece’s parliament. The population mainly reacted with delight when their politicians took the country into the Euro in 2001; it was widely known that the Greek government had cooked the books in order to qualify, but this was perceived as the wily Greeks getting one over on the stuffed shirts of Brussels. Mutterings in Berlin about chickens coming home to roost are not without justification.

Last night the Greek government passed an austerity bill (after a torturous negotiation process) that cuts another 150,000 public service jobs and slashes the national minimum wage. The response has been muted; social unrest has been restrained (by Greek standards; reports of 80,000 on the streets yesterday is big for any other European country but the fact that they were only out for a day or two speaks volumes), despite the lurid images being broadcast to the rest of Europe. The country of no seems beaten into submission.

Greece’s role in all of this is to be the sacrificial goat. Greece has the option of default, ejection from the Euro and an internal restructuring – which would be painful in the medium term, when the country has restructured enough to want to go back to the bond markets, but far less painful in both the short and long terms than the current retrenchment being enforced upon it. Greece can’t grow, and will thus never be able to pay its debts under the current status quo. But Greece’s parliament has been persuaded that the Euro crisis is Greece’s fault, and that its sacrifice is necessary for the sake of the Euro. And so it falls on its sword.

Unquestionable, however, is the claim that a Greek default would cause massive contagion. Talk of a Greek collapse triggering a tumble in Spain, Italy and even France is not scaremongering; it’s a very real and present threat. The ECB’s strategy is not to prevent a Greek collapse; it’s simply to stave it off for long enough to make sure that the fire won’t spread.

In 1940, when Greece was the only country in mainland Europe to stand up to Hitler and Mussolini, its spirited intransigence was hailed as a moment of national identity shining through. In 2012, Greece is once again singled out. I doubt that “yes day” will be remembered with quite as much fondness.

I’m going to write about parliamentary tactics today. Not because it’s interesting – it’s about the inside baseball of the UK Parliament, and is thus really only interesting to about ten people in the world ever – but because it’s been tickling me ever since I noticed it. This is going to be a post about how the government runs itself politically, how it organises its business to avoid political risk, and how the government is already preparing for the next election. Okay?

There’s a reason why this post is happening today, and it’s not going to be a surprising one. The Huhne departure and the subsequent intake provoked fevered speculation (£) and even a a flurry of moves on the betting market. All of which is marvellous, and I’m sure that the merits of the Huhne story will keep us all entertained for weeks to come. But what was noticeable was the change in the way that such political events were handled.

For a start, the reshuffle was announced by Clegg rather than Cameron. I wouldn’t care to dig back into the stats, but it’s certainly the first time since the beginning of Thatcher’s government that a reshuffle was announced and presented by someone other than the PM.

The significance of this is heralded by the fact that it was widely referred to as a “Lib Dem reshuffle”. And lo, only Lib Dem ministries were affected, and hardly any of those at that – Ed Davey, a grassroots favourite, joining the bigtime, with Norman Lamb picking up his old seat at Business. And that’s pretty much it: a tiny reshuffle, by any measure. This mirrors the replacements of David Laws and Liam Fox, both of whom were replaced in straight promotions.

What’s the point of all this? I find it interesting that three high-profile exists have resulted in no shuffling of the deck chairs. Nearly two years into the parliament and the only changes to the roster have been those enforced by circumstances. What’s going on?

Well, partly it’s a reversion to the norm. The Blair and Brown ministries were tumultuous; the former was a famous reorganiser, making no fewer than fifteen discretionary changes during his 12 years in office. Wikipedia has the movements of the Brown Ministry (which just over two years, remember) in handy diagram form:

Click to enlarge

This frenetic pace was due to the tactics prioritised by both Blair and Brown during their times in office, and is due in part to the dual nature of a cabinet role.

On the one hand, a seat at the Cabinet table is a job. It requires understanding, dedication, and knowledge, often of a broad area of policy with far-reaching effects on the lives and livelihoods of a chunk of the population.

On the other, it is a perk – a position of power and responsibility, and a visible measure of one’s position in relation to one’s colleagues and coevals. It is a springboard for further career development, or an acknowledgement of distinguished service.

These two impulses are often found in opposition to one another. An MP who is granted cabinet office as a political stepping-stone, as part of the process of being groomed for leadership or simply to keep a talented public figure inside the tent tend not to have a background in their designated office, and tend not to have a very developed interest in its minutia. In a climate where political offices are treated as tools of favour rather than jobs, any MP who has a background in a specific area tends not to be ambitious beyond the remit of that area, and thus simply gets stuck. Chris Mullin MP said in his valedictory speech, and transcribed into his diaries:

“Mr Speaker, government needs to become a little less frenetic. The practice of annual reshuffles is massively destabilising and confers enormous power on the civil service. There have been eight secretaries of State for work and pensions in the ten years since that department was invented. Of late we have been getting through Home Secretaries at the rate of almost one a year. Goodness knows how many Health and Education secretaries we have had. We are on our tenth Europe minister. Our ninth or tenth Prisons minister. I was the sixth Africa minister, the current incumbent is the ninth. Mr Speaker, this does not make for good government.”

One of the things that the Cameron government has done right has been to settle the ship in that area. I’ve written before about the merits of Iain Duncan Smith as a knowledgeable and capable Secretary of State, but it is notable that most members of the cabinet have a background in their chosen area. There is a real reticence towards moving people around for the sake of securing political obedience. When Tory rising star Louise Mensch was misquoted last year about being discontent at her lack of ministerial position, the response was tepid – not because Mensch is uncapable (she is capable) nor because she is unpopular (she is one of the leading faces of the 2010 intake), but simply because this is not a government that reshuffles lightly.

But this is part of a broader tactical change brought about by the coalition government. One of the key advantages of the approach taken by the government towards reshuffles is that it means that Secretaries of State can spearhead their own Departments’ initiatives. This is a big tonal shift from the recent past, and one that the opposition has failed to fully adapt to.

The effect of this is that backlashes to unpopular policies – and there have been many over the past two years – are effectively confined to their silos. While private schools (Michael Gove), NHS cost-cutting (Andrew Lansley), benefits cuts (IDS), banker-bashing (Vince Cable) and baton charges (Theresa May) – not to mention austerity (George Osborne) – have roused ire on both the left and the right, David Cameron’s popularity has stayed more or less completely static, and the damage to the government’s popularity as a whole has been surprisingly muted. Because David Cameron is not perceived to be spearheading any of these initiatives, attacks from Ed Milliband on him personally – both in speeches and at PMQs – have failed to stick. But because he represents the government in the mind of the electorate, he provides his party with a degree of cover even as his ministers’ reputations get progressively worse and worse.

This is a huge shift in the way that government is conducted. Thatcher, Major, Blair and Brown all ruled, to a greater or lesser extent, in a presidential style, taking political ownership of policies enacted by their cabinet and ultimately coming unstuck when they could no longer evade the consequences. Cameron is returning to an older style of politics which prioritises collective responsibility. It has its weaknesses – back-bench unrest is harder to quell with the promise of patronage, as seen by the growing number of Tory and Lib Dem mutineers (the latter part has seen more defiance against the whip since 2010 than it did in the entire prior decade), and in the unlikely event that the government enacts some popular provision it is, by the same token, unlikely to rub off on Cameron himself. But it is also an astute response to a time of coalition and austerity. Whether it can keep the poll numbers of the coalition partners robust until 2015 remains to be seen.

As I am breaking into power stations with my sister.

What’s going on in the world?

There’s a bit in the last season of the West Wing where CJ is interviewing for a new job. She is ask what she would do if she was given a blank cheque and told to go fix Africa.

Now, her answer was “build roads”, and as a line it works – it’s intended to help a TV audience think about problems of third world countries in a different way. Solutions don’t have to be purely political; lives can be changed through more earthy means. Roads mean access, which means supplies can be provided to struggling settlements and trade networks can develop over greater distances. The yields of infrastructure spending increase exponentially from a lower base; the upgrade from dirt tracks to tarmac roads is massively more worthwhile than an upgrade from conventional rail to high-speed rail, for example. And physical infrastructure as an aid project carries long-term benefits for the aid giver; to this day, a British passport will get you preferential treatment in Saudi Arabia, beyond that even accorded to US passports, because – yes – Britain built the roads. From one of the most intelligently-written shows in recent times, it’s a solid B+ answer.

A fair critique of the road-building plan would be that gains from infrastructure investment rely on other indicators. In a sense, the question is flawed – you can’t fix all of Africa with a single policy, because Africa is bigger and has more diverse problems than any other continent, and if there was a silver bullet even the singularly incompetent political classes of the baby boomer generation would have stumbled upon it eventually. Infrastructure development would work wonders in countries like Botswana, Ghana, Namibia or Mali, which are democratic, broadly stable, but underdeveloped and in need of greater access. It would even have possible benefits in countries like Liberia and Zambia, which, although very unstable, are steadily normalising and could use the positive economic impact to bed in positive change. However, improved roads would be meaningless in places like Sudan, Ethiopia, Somalia, the Ivory Coast or Nigeria – the countries that need development the most. On the one hand, production levels are simply not high enough that infrastructure development would add meaningfully to economic opportunity. On the other, any fresh outbreak of hostilities would shred the roads, or – worse yet – use them to spread conflicts further and deeper.

A better use of donor time and money would, sadly, be to go back to the slightly dry and tedious stuff of political institution-building. Before economic growth and access can truly begin, the constant cycle of instability, megalomania and bloodshed has to be stopped. An armed madman with an army and a significant chunk of the nation’s wealth will always trump any supply-side reforms that international donors can impose, and that is still too common an occurrence in a continent that has provided the ICC with 100% of its indictees.

The aim is not necessarily even to promote democracy, however, although of course more democracy would be delightful – the crucial factor is not mode of government, it’s rigour of governance. More important than jump-starting elections are the processes of implementing reliable judiciaries, building functioning civil services and ensuring that such national services as are provided – schools, policing, and medicine in particular – are run according to standardised norms. Ideally, that can be extended further – the commissioning of public works via PPP models, which has brought huge benefits to Central and Latin America, and the implementation of patent regimes and intellectual property laws.

Isn’t this all rather ephemeral? Can it really be more useful to implement patents than it is to build something as fundamental as a road, or as important as universal suffrage? Well, yes. History demonstrates that societies cohere when they have both something to protect and a viable means of protecting it. Both democracy and broad economic empowerment tend to be lagging indicators; the great powers of Europe all had functioning, largely independent judiciaries long before they had suffrage, unions, or widespread road networks. Meanwhile, the stark difference between resolute non-democracies such as Singapore and Zimbabwe can be explained by means of the application of the rule of law far more effectively than the reach of their respective road networks. Governance institutions, vulnerable as they are, are the building blocks upon which stable societies are built. Any attempt to move forward without them is a construction built on sand.

Francis Fukuyama is embarking on a project to examine the relationship between western aid efforts, their emphasis on democracy promotion and the actual effects that this can have on governance. At a time when Libya is engaged in building a democracy without any functioning institutions of governance to speak of, his findings may turn out to be important.

As a percent, how much of the UK economy is given over to:

- Financial services
- Manufacturing
- Retail
- Professional services eg lawyers, accountants etc

?

…Dave, Eden, UKTV Gold, Good Food. The Austin Powers song would be much less catchy.

The BBC’s currently catching some heat due to its lack of female representation in its top news programming. Lib Dem MP Tessa Munt is leading the charge, and is currently not facing much resistance. The Today Show, Radio 4′s flagship current affairs programme, typically has a male host, and around 80% of its correspondents are men; Tory MP Louise Mensch is taking aim.

Of all of the BBC’s woes, this is a relatively simple one to fix. The bigger issue is cultural, and is as follows: As an institution funded by a mandatory tax, it is almost impossible for the BBC to fulfil all of the functions it is expected to fulfil.

I’m not going to delve too deeply into that as it’s a well-trodden issue. An institution that both annoys Rupert Murdoch and gives a mouthpiece to Jeremy Clarkson knowingly runs the risk of making enemies. The BBC think that they can handle this and they should know.

What I want to talk about is the fundamental structure of the BBC and how this adds to their woes. The biggest obstacle to the BBC’s public image is self-inflicted: the sense that the BBC is a single organisation with a single objective, rather than a series of four or five entirely separate bodies with entirely separate objectives, business models and output.

The “main” BBC, which sits under the Director General and is what people generally think of when they refer to “the BBC”, is a mostly public body which supplements its income from some clandestine private ventures. It is responsible for all programming; it is subdivided into BBC Vision (which handles BBC 1 to 4 and commissions their various outputs), BBC Audio and Music (which handles the national radio stations as well as music-based television, such as the BBC Proms and the output of the BBC Philharmonic), and Future Media (iPlayer and the like), as well as corporate functions. This covers a lot of the BBC’s visible function in the UK, and is thus frequently considered to be the most significant part of the BBC. In fact, it is politically and economically the least important part of the Corporation. It has a single function: to partially justify the continued existence of the licence fee.

The BBC Trust is a separate body with an overall monitoring function. It’s mission is to ensure that the BBC acts in the best interests of licence fee payers. Its existence is mandated by the Royal Charter that gives the BBC licence to operate on the basis of a levied television tax; it is funded entirely by the licence, taking its chunk directly from HMRC rather than from the BBC itself. The current government wants to abolish the Trust and have the BBC entirely subject to external oversight when the current Royal Charter expires in 2016.

Next is BBC News. BBC News nominally sits under the “main” BBC, and is thus funded in the same slightly ambiguous way as the parent corporation, but is operationally distinct. Since the early 2000s, there has been political pressure on the BBC from all sides to protect the editorial independence of BBC News, which has massive influence in the UK, and the current Government has a stated policy of forcing the BBC to divest of the News operation altogether and have it be run as a separate entity. In practice this is functionally already the case; the BBC has been steadily preparing for the inevitable for several years.

Slightly further along is the BBC World Service. The World Service functions as the credible half of the BBC’s Trojan Horse of Cultural Diplomacy. The World Service deals with the BBC’s news channels outside of the UK; it transmits programming in 27 different languages and is available by radio in most of the world. While the BBC Charter mandates that the BBC World Service be politically neutral, it is of course anything but. It’s production is handled by BBC News, but its editorial and managerial structures are entirely separate, and – until 2014, following reforms enacted in 2010 – is funded by the UK Government’s Foreign Office rather than the licence fee. It is thus explicitly political and is used as such. Iran hates the Farsi version of the World Service, while Aung San Suu Kyi is a big fan. Neither of those things are unrelated to the World Services’ editorial positioning.

The BBC’s operations start to get murky when we get to BBC Worldwide. BBC Worldwide is the “commercial arm” of the public entity and, again, is run as an entirely separate concern. It was spun off from the main BBC in 1995 with an explicit mandate to be run as a commercial, profit-making entity, and its revenues are routed back to the main corporation to subsidise their operations. Over the last decade and a half Worldwide has taken a very flexible approach to the activities it is permitted to perform.

Worldwide’s core activities initially involved producing commercial BBC products (broadly, anything that you can buy in a shop: magazines such as Good Food and the Radio Times; Top Gear DVDs; In The Night Garden stuffed toys) and selling the rights to BBC programmes overseas. This has expanded greatly and BBC Worldwide now operates its own commercial, advertising-supported satellite and digital channels, both overseas (BBC America [which is unrelated to the operations of the World Service, despite the naming convention], BBC Entertainment in India) and in the UK (it is little known that channels such as Dave, UKTV Gold, Really, Blighty, Watch etc are all run by the BBC). Further: BBC Worldwide now commissions original programming for its commercial channels, including panel shows for Dave and nature documentaries for Eden. BBC Worldwide is the sole owner of Lonely Planet’s line of travel guides. More worryingly, Worldwide may be on the verge of buying the UK’s Channel 4, further consolidating the BBC’s stranglehold on terrestrial programming in the UK.

The interesting thing about BBC Worldwide is that it exposes a little lie: that the BBC can’t operate without the licence. In many ways, Worldwide is duplicating the BBC’s operations at a smaller scale, but it is by some distance the most profitable satellite operator in the UK, annually returning more money to the BBC than Sky does to its shareholders. Access to a half-century of the BBC’s most beloved programming helps; while the decision to create a channel with low operating costs, dedicated to showing repeats of Top Gear and panel shows, was extremely low-risk, the success of channels like Dave has surprised even the upper echelons of the BBC’s senior management.

But the money generated and returned to the BBC’ budget by Worldwide still only accounts for around 10% of the Corporation’s operating budget. While Worldwide is an interestingly murky corner of the BBC’s operation, it doesn’t yet provide a model that the rest of the BBC can follow. It would be interesting to see what Worldwide could do with BBC1′s viewing figures, however. The argument has always run that the shelter of the licence fee allows BBC the creativity to experiment with its programming. Whatever Worldwide’s approach it is, however, it can’t be worse than season 2 of Sherlock.

In the boom times, the tension between tax and spending was muted. The government made enough money from relatively modest taxes to fund increasingly elaborate spending plans (in the UK, forgetting that spending should be counter-cyclical – but that’s another matter), meaning that while the issue of taxation existed – as it always goes and always will – it was relatively easy for the government to fend off.

We’re not in the boom times any more, however, and thus the issue of tax optimisation has come up again. The less tax government spends, the less it can spend on services; but the more tax it takes, the less money there is in the real economy for people to spend, hitting jobs, wages, and ultimately taxes. Tax is the Jörmungandr upon which public policy is built, and the question of how much you can tax before the negative impact on the economy outweighs the spending benefit has sharpened over the last half-decade.

As a result, lots of different groups are looking at the question in different ways (as I write this, Andrew Neil is debating Laurie Penny on the retrospective merits of the Community Charge – aka the Poll Tax. It’s not going well for Brillo). And it’s not just the usual leftie malcontents; in America, the very rich – led by the world’s second-richest man, Warren Buffet – are themselves questioning the levels of tax levelled upon them: Buffet famously claimed to pay a lower rate of tax than his assistant.

Increasingly there are numbers to back the various positions up. Shortly before Christmas, a group of economists – Thomas Piketty of the Paris School of Economics, Emmanuel Saez of the University of California, Berkeley, and Stefanie Stantcheva of MIT – put out a paper (pdf) detailing optimal rates of top-rate tax. The results are surprising.

Kevin Drum elaborates on the results, but in short, the paper asserts that top rates of tax can go as high as 76% without inflicting economic damage greater than the net benefit derived. The writers of the paper take a conservative view of behavioral elasticity, as well, so the risks of the rich “going Galt” and fleeing to tax havens is priced into that calculation. There is some historical evidence to support that, too. The UK’s top rate of tax, set at 50%, has made next to no difference to wealth creation since it was implemented a year and a half ago. Furthermore, Martin Feldstein of Harvard found that the 1986 cut in the US top rate of tax, from 50% to 28%, made no perceptible difference to the gross tax yield.

Feldstein does not conclude that taxes can be raised, however. His conclusion is that the tax based needs to be broadened by eliminating reductions. To be fair, the other paper makes a similar point. Have a high tax rate may not intrinsically undermine the economy, but it’s a wasted effort if you still allow people to find ways to avoid paying it. So the first task of tax reformers must be to minimise such opportunities by having a broader tax base, better enforcement and similar tax rates for different kinds of income.

And that’s the problem. Even in small countries – like Sweden – keeping the exchequer in order is a massive challenge. For countries like Britain and America, with a vastly diverse economy and an especially ornate system of financial services and products, any attempts to design a straightforward tax system run into a conflict between fairness and flexibility. Schemes such as that designed by the Deputy Prime Minister, to raise the income level at which tax is charged on the lower band, may be the most straightforward way to force the issue. Removing pressure at the bottom of the pile has to result in increasing it at the top, and if these reports are to be believed, then the top has plenty more to give.

Amid all of the sound and fury surrounding the government’s attempts to change the UK’s benefits system, sight of the grand strategy of entitlement reform was lost this week.

First, a recap. The dramatic interventions of the House of Lords put paid to a couple of the cabinet’s initial skirmishes; plans to cap the benefits that can be claimed by a single household to £26,000pa were stymied by an amendment which has caused child benefits to be excluded, essentially rendering the policy pointless (as the £26,000pa cap is impossible to reach without child benefits being a factor). In a further incursion, the Lords blocked a plan to make single parents pay for the right to claim child support from their absentee coeval. Earlier, the Lords had also dispatched some of the more egregious depredations planned for the Disability Living Allowance in the aftermath of the Responsible Reform (“Spartacus”) Report (pdf). All in all, it’s been a series of bloody defeats for the government in the House of Lords.

Taken individually, you could quite justifiably suggest that the government was acting in a manner that was arbitrarily and deliberately malicious to single mothers, the disabled and the unemployed. Of course I couldn’t possibly comment.

But these individual battles do take place in the context of a wider war. The government wants their benefits to carry a smaller price tag, and are unrepentant about the fact that this will require a reduction in the overall levels of benefits paid out. However, the endgame also features a few policies with real value, including a promise of the holy grail of benefits reform.

Firstly, it’s important to look at the idea of the Universal Credit (£) as a principle. In short, the Universal Credit rolls most existing benefits – including income support, jobseeker’s allowance, disability living allowance, child benefits and housing benefits – into a single means-tested benefit.

This isn’t a massively new idea. The DWP has been pushing the benefits of a universal credit internally since the end of the Major government, and it has been the recommendation of most benefits-focused think tanks and organisations at some point over the last two decades. The reason why it doesn’t exist already owes a lot to the nature of politics in the UK. One of the main criticisms levelled against the last Labour government was that it failed to take the Work and Pensions brief seriously. This was symptomatic of the way that Blair in particular organised his cabinets: positions were often allocated on the basis of loyalty rather than expertise, and as a result the position of Secretary of State in what became the DWP was treated as a political stepping stone rather than an office with an actual function. Part of the problem is that Work and Pensions is not one of the sexy Offices of State – it lacks the glamour of the Foreign Office, or the power of the Home Office or the Chancellery. The benefits portfolio is massive – accounting for by far the largest portion of government spending – and one that it is almost impossible to succeed in.

Whatever criticisms can be levelled against Iain Duncan Smith, however – and there are many – he is the first Secretary of State that the DWP has had since well before Thatcher that both supports the premise of a benefits structure and possesses a practical interest and knowledge in its workings. He is not a careerist – he has lead his party and has no aspirations. That alone is important for one reason: the continued presence of an interested Minister means that, for the first time in decades, there is a genuine interest in reform.

The shift to a Universal Credit comes with some positive and negative consequences, but responses have split – as everything does, these days – along strictly tribal lines. So before we go too much further, this needs to be said: the idea of a universal credit has held a position of logical necessity for almost every expert in the field of benefits reform for nearly thirty years. The specifics of implementation are important and worth more rigorous consideration, but the raw benefits and disadvantages of a universal credit go deeper than political ideologies.

First, pros. The administration of a single universal credit scheme would be massively more manageable than the bloated manpower infrastructure and costs generated by the DWP, which is something like the fifth largest employer in the UK today. If the government has to cut costs then this is an unambiguous win – every penny that can be saved in benefit administration is a penny that doesn’t have to be cut from the benefits themselves. A massively detailed pdf by Gareth Morgan suggests that those who require benefits for a single reason would find themselves better off under the scheme. More will be done on a sliding scale, meaning that benefits can be more flexible to recipient’s needs, rather than the currently rather inflexible scheme that sees millionaire pensioners automatically receiving bus passes. Finally, the single universal credit has the big advantage of removing the delineation between different types of benefit, and thus the attached stigma that comes with specificity.

Then there are cons. While the recipients of single benefits would on the whole be better off, those who claim multiple benefits – child support and disability living allowance, for example, will find their net benefits decreased, although they will also find the process of applying for the single benefit more straightforward than the current melange. On that subject, however, means testing is controversial. That dispute is also varied in quality – some assert that it is a way of bullying recipients into accepting less, some claim that it’s a more direct way of objectively evaluating and eliminating scroungers – but either way, it is indisputable that means testing results in lower payments overall. Importantly, given the government’s recent record of aggression towards claimants, a wholesale switch in systems can be used as a trojan horse to sneak benefit cuts in through the back door. And finally, while the operation costs of a universal credit are much lower, the implementation costs are high. The Chancellor is reportedly relaxed about this, but there are reports that some of the more extreme attacks on existing benefits levels are being added at his behest, so it is unclear whether the calculus will change for him if the Lords continue to work in exclusions.

Finally, the risk of any change to the benefit system is the accompanying rhetoric. Whatever happens, expect more fulminating about scroungers.

So the devil remains in the details. On balance, a universal credit’s benefits outweigh its depredations – any negative impact on overall benefit levels can be counteracted from the massive stack of money that will be saved from operation costs. Whether you trust the current government to pass a policy that works as benignly – or think you can count on the House of Lords to stand in the way of the worst excesses – is another issue.

There is an old adage to the effect that the Franco-German relationship exists to both hide France’s weakness and obscure German strength.

Post-reunification, Germany has had an uneasy relationship with its own power. It remains a reluctant military power, much to the frustration of its allies in Washington, London and NATO; and in the EU it has preferred to wield it’s clout quietly, allowing France’s Nicholas Sarkozy to take the lead on promoting a “Merkozy” agenda while keeping its own arm-twisting activities behind closed doors. The one area in which Germany has been contend to exert itself has been economic. Ironically, the division and reunification of the country has left it less dependent on post-manufacturing industries and recession-hit developed markets than it’s big European stablemates, and its historic position as east and south Europe’s main creditor has been carefully mitigated by extraordinarily low levels of public, corporate an personal debt. An economy that was already reaping the capacity benefits of its long, slow process of reunification is ideally placed to maximise its gains from a weak global economy and its subsequent rebound.

France is another story. The global recession has been particularly cruel to France, exposing the gaps in its massively centralised, leveraged economy. Even Britain’s similarly sized and distributed market has fared better, partly thanks to the City of London’s cozy relationship with the money markets but also thanks to a perception that the UK, which has much more control over its own currency and spending, is better placed to affect a recovery. The recent downgrade of its bonds by S&P has also effectively ended he collective delusion that France could be at the political core of the Eurozone. What moral right does France have to lead when it is ultimately in the same firing line as Italy and Spain? It’s political authority was always borrowed, but now the transaction is compromised. The ideological core of the Euro is Germany, and always has been, but that is now explicit.

This is starting to show in practice. Over the last month Angela Merkel has been taking meetings with European leaders in private, to promote her agenda, bypassing the French altogether. In public both sides insist that nothings has changed, but tell-tale signs of status anxiety – familiar to those who have observed the Anglo-American relationship – have started to emerge from Paris.

There are both opportunities and risks here for Germany and the Eurozone. The risks are most obvious. A Europe led by Franco-German concord could maintain a veneer of consensus politics. Unbridled German leadership may will no longer have that figleaf, and public discontent at ECB-enforced austerity may take on a new form. The image of an assertive Germany remains politically sensitive in Europe, for reasons that feel anachronistic in Britain and America but which still strongly resonate in Poland and Hungary. And like it or not, Germany’s political class are curiously uncharasmatic by European standards. This sends a message about what the Germans look for in a leader, but makes the task of selling tough economic reform to the Greeks and Italians – who have a marked preference for flash in their leaders – more of an uphill struggle.

The opportunities, however, are massive. Germany’s self-imposed doctrine of consensus-led soft power has allowed it to recover both the position and the reputation that it has always traditionally enjoyed, but the extent to which it can help – now that it has surpassed its local rivals and remains the only identifiably big fish in a medium-sized pond (which is shrinking by the day) – is diminishing. Meanwhile, it commands vast production resources, an educated and mobile workforce, and all of the legal accouterments considered necessary for an emerging market make the big leap. It feels odd to be talking about Germany as if it were an emerging power, as its level of development greatly exceeds that of the likes of, say, Brazil or South Africa. But, at the head and the heart of the world’s largest common market, Germany has the potential – if harnessed properly – to parlay its current position into something much greater. It is not too big a claim to suggest that the 21st Century could as easily be German as Chinese.

The obstacles to this are great. Britain, France, Italy and Spain are as likely to obstruct German leadership as support it, although – as David Cameron’s abortive veto over changes to the Euro Stability Pact before Christmas demonstrates – mutual antipathies make them unlikely to oppose a German ascent in tandem. The bigger obstacle is that Germany largely does not perceive itself as a hegemon-in-waiting. But then, neither did America. What is interesting is that Germany has many of the qualities required, should the need arise.

Ron Paul is a man with a small but constant and passionate fanbase. There are many reasons for this, some good, some bad – he is one of the few candidates to openly advocate liberalisation of drug law, for example, and in general his supporters, charitably, tend towards the naive on subjects such as his apparent racism. But one of the reasons for his enduring appeal is his advocacy for a military isolationism. In a country that has been suckered into too many wars of choice since 1950, a candidate promising a return to the good old days, when wars were fought only in the national defence and politics ended at the water’s edge, has a certain appeal. It even has an element of historical rigour to it; the great long-lived empires of the past have tended to shy away from ambitious rhetoric of global responsibility, fighting wars only to protect their back yards or expand them. President Obama was elected party on the basis of a similar aspiration.

Paul argues that America’s twentieth century saw its competitiveness and prestige tarnished through a series of ideologically incoherent, politically unnecessary wars, which also happened to be massively expensive and left the country’s political class in hock to its military industrial complex. He doesn’t just want to pull US troops out of its remaining one-and-a-half wars; he wants to root the military out of government payrolls entirely, proposing to shut bases from Germany to Korea, ending foreign aid entirely (which of course plays into a broader political point, part of which is that much of that aid goes to countries who simply use it to buy American kit), and reducing both economic and military support to Israel. The last paragraph tells you one important thing about Ron Paul: namely, that he will never be the President of the United States, or even a nominee for that office. Nevertheless his ideas resonate, both with young libertarians and rightward-leaning centrists. They have a long tradition in the US – military intervention is a post-war innovation, and it has been noted that Paul’s policy really only echoes those of the country’s thirteenth President Millard Fillmore.

But Fillmore lived in simpler times. Do the politics of a complex, interconnected world allow for the isolation of its greatest power?

The short answer is probably no. Obama has found disentanglement harder than his campaign rhetoric suggested; the Afghan war drags on, drone bombings have massively increased and offences against human decency, such as corpse desecration and Guantanamo Bay, remain as problematic as they were under President Bush. This is partly a reflection of the world in which we live. Retired Colonel Pat Lang today asked

It is not clear to me what Ron Paul’s actual position is. Someone should ask him what he would do if the Iranians actually attempted to close the Strait of Hormuz to international maritime traffic. What would he do as president and commander-in-chief of the armed forces?

Presumably Paul’s counter would be that, by pulling its military out of Iran’s vicinity and reducing its support for Israel, the US would reduce tensions and improve its leverage sufficiently that such a situation would be less likely to arise. But this is optimistic, not least because the US is hardly alone amongst Iran’s agitators (Britain is arguably even less popular in Iran than the US). Disrupting oil traffic is an extreme case, but the truth is that the US is implicated, either directly by dint of supplied equipment, economically by dint of strategic interests, or morally by way of training or political support, in more or less every conflict that could conceivably take place. The international system is immensely complex. The US can not extricate itself from the web of coercive force that partly constitutes the international political order. One way or another, all wars are about power, and therefore all wars inevitably factor in the superpower. Declaring isolationism will never protect the US from being attacked.

Obama has already demonstrated that imprudently promising an end to American war. In truth, the call to war for any country is often driven more by events outside that country’s borders, and the intentions of a single leader can rarely stand in the way of the inevitable – remember, George Bush Jr came to power expecting to be a peacetime President. Paul’s rhetoric is hopeful, but it is based on a fantasy that can never be realised unilaterally. Were Ron Paul ever to find himself in the unlikely position of holding office, his principles would not survive first contact with the enemy.

This week saw Romney’ aura slip as Newt win South Carolina, tensions with Iran tighten as the US and Europe blocked oil imports, and Scottish independence take a bit step forward. However, my face of the week for this week relates to none of these stories. Like most, if not all, observers, I thrilled as Britain’s most popular elected official effectively launched his re-election campaign:

Between lobbying for a new airport in the Thames estuary, planning fresh tunnels under the Thames in Greenwich and criticising the unemployed youth of today (a population which includes your humble author) as being too feckless and lazy to find work, London’s Mayor Boris Johnston has been ubiquitous this week. As often happens to elected officials, he swiftly found that the more people see him, the less they like him, but he remains likely to regain the nomination simply by tilting at his own party from the left. Another four years of dealing with the finesse of bus policy beckons.

Congratulations Boris Johnson, my Face of the Week!

I owe the internet a longer post about hedge funds, because they’re an interesting phenomenon, and an instructive one for anyone interested in some of the more exotic products thrown up in sophisticated money markets. This won’t be that post, though. For now I just won’t to respond to this piece from Matt Yglesias, who now blogs for Slate:

Insofar as hedge fund managers are just running a scam where one class of rich people rips off another class of rich people, I’m not sure there’s anything systematically problematic about this. But a large share of the money invested in hedge funds seems to come from foundation endowments and pension funds. That in turn makes me wonder to what extent some of the dysfunctional aspects of the financial system can be traced back to dysfunctional governance of those institutions.

Yglesias (and the Economist’s Buttonwood, who he quotes) correctly observe that hedge funds have grown by a dowdy 2.1% over the last decade and a half, despite a booming economy. Indeed it is true – hedge funds have, over the last decade, failed to justify their existence in many respects. But there is a divide between how hedge funds are perceived as an element of the financial system and how they’re used by massive passives – pension funds, endowments and so forth. Hedge funds are often referred to as being an absolute return strategy, and many think this means that they simply exist to make as much money as possible by any means necessary. But that is in fact very rarely the case.

Primarily, hedge funds exist as a hedge against negative performance in more traditional asset classes; thus the name. A pension fund with a properly diversified portfolio will have a hedge fund allocation, not as a workhorse, not to generate massive returns, but to take advantage of unexpected effects elsewhere in the market – sudden stock market rises and falls, geopolitical instability, or bubbles. In other words, a hedge fund doesn’t have to outperform treasury bonds over the long term to justify its existence in a portfolio – it simply has to massively outperform treasury bonds during those periods when bond yields are weak, and thus protect the overall value and yield of the portfolio as a whole.

Now, over the past three years hedge funds have largely failed to do that. In fact they have had a torrid recession, largely because they are pursuing highly correlated strategies (i.e. strategies that closely mirror economic indicators, and thus largely conform to broader economic trends) – a recent study showed that 80% of hedge funds were investing in Apple, which is fundamentally not what pension funds use them for. Which just goes to show: Yglesias may not know what hedge funds are for, but he can be forgiven for that, as many hedge fund managers appear not to either.

Over the past week, the race for the Republican nomination for the White House has taken another strange turn. With the ink still wet on newsprint declaring the contest all but over – Mitt Romney having taken Iowa and New Hampshire, and having built up a prohibitive lead in South Carolina – it all suddenly unravelled. The Iowa win was taken from him as his slender victory was overturned, in Rick Santorum’s favour; and the removal of former favourite Rick Perry from the race saw Newt Gingrich leap into the lead in South Carolina. Meanwhile, questions about his tax affairs cropped up – allegedly he has been paying less than 15% on his many millions, and tax scandals are possibly second only to sex scandals in the affection of America’s tabloids. Suddenly, it’s all to play for again.

The merits of the contest are uninteresting. Romney is still overwhelmingly likely to win the nomination, but regardless of the outcome, then the Republicans – whose media mouthpiece, Fox News, this week referred to the President as a “skinny, ghetto crackhead” – will get the nominee they deserve. A defeat for President Obama is looking increasingly unlikely this November. America hates Newt but they’re lukewarm on Romney at best (Stephen Colbert: “the only difference between Mitt Romney and a statue of Mitt Romney is the statue never changes its position”), and as 2012 is likely to be a year of modest improvement in the US economy Obama doesn’t need to do much more than avoid tripping over his own feet.

The question remains, though: why has this Republican race been so weird?

From the moment Michelle Bachmann won the Aimes straw poll, a non-binding poll that is perceived as an Iowa bellweather despite its spotty track record, the race has been in almost weekly flux. Candidates have ascended swiftly then collapsed as an indecisive electorate have searched for a credible alternative to Romney. Fortunes have been made and lost as pundits, powerbrokers and gamblers have seen the shape of the race and built a position upon it, only for it to shift beneath their feet.

So what it is about this race, that has made it so volatile? Well, there are a number of factors, inevitably. One is the genuine lack of quality in the candidates. The nominees with an proposition that honestly appeals to a section of the electorate – Romney and Ron Paul, primarily – have performed consistently. Bachmann, Perry, Cain, Santorum and Gingrich have struggled, partly because they are competing for the same demographic (cultural conservatives and the reactionary right), but also because of their personal flaws. Bachmann has a long track record of saying incredible things on topics from taxation to religion; Perry is a stilted debater, prone to gaffes; Cain lacked a sufficiently robust and coherent grasp of his own policy proposals; Gingrich is a man of manifold personal flaws, which turns off his culturally conservative constituency. In many ways Santorum is a more ideal candidate, but his extreme conservatism may be a stretch too far even for Republican voters – he believes that even contraception is a sin and a threat to America, let alone abortion. He also suffers from attacks levied against him via his Google search results. All of these characters have wilted under fire from a largely hostile media, which has tactically engendered conflict between the candidates and their voters. Gingrich and Santorum have bounced back, the others have dropped out. Complaints about the lamestream media have inevitably followed, but if the candidates weren’t weak they would not need defending.

The other issue is the Republican Party itself. The split that emerged in 2008 between the mainstream party and its extreme Tea Party manifestation still exists, and the reality is that no candidate can convincingly appeal to the full breadth of aspiration in the party. This is a serious divide that will keep the eventual candidate from the White House in 2012. It’s debatable whether the it’s a conflict that cam be resolved at all.

A growing sense of unease is evident in Britain and the US. Populations that have been railroaded to war once suspect that the gears are quietly crunching once again. They may be right.

I saw “may be right”, but the only real doubt is to whether a state of declared war will exist in the near future. Because the US and Israel have been pursuing covert war against Iran for decades; STUXNET, drone incursions, explosive sabotage and targeted assassination of nuclear scientists, the last of which is arguably an act of terrorism. The ostensible casus belli is Iran’s nuclear programme, but Iran has consistently denied that it is making a bomb, claiming that its programme is purely civilian. That this is a lie has become an almost unchallenged public orthodoxy in Washington and Tel Aviv.

To those in the know, however, broad uncertainty does exist, which explains the emergence of articles like this one in today’s Haaretz – Israel ‘very far off’ from decision on Iran attack – which claims that Israel’s intelligence community believes Iran itself has not yet decided whether to make a nuclear bomb.

The Israeli view is that while Iran continues to improve its nuclear capabilities, it has not yet decided whether to translate these capabilities into a nuclear weapon – or, more specifically, a nuclear warhead mounted atop a missile. Nor is it clear when Iran might make such a decision.

This rings true to me. To an extent, the fate of the nuclear programme depends on both the extent to which external provocation backs the regime into a corner, as well as the extent to which internal pressure allows the government a free hand. 2012 could be a pivotal year in Iran – a parliamentary election in March offers a threat for fresh political instability, and an oil shock or the collapse of the Syrian regime could increase the ability of Iran’s enemies to tighten the screws. Any of these factors could bring even Iran’s robust political construction tumbling down.