Tuesday, 13 February 2018

The strange rebirth of Liberal economics

This post first appeared on the Radix blog...

Once upon a time, I was a member of the Lib Dem's federal policy committee. I used to irritate Danny Alexander and other luminaries by claiming that Liberals had made no contribution to economic debate since John Maynard Keynes had breathed his last in 1946. In retrospect, this wasn't terribly helpful of me, but I believe it to be true.

I don't include in this stricture, of course, the so-called 'neo-liberals', who are not Liberals in any sense of the term. Their main contribution has been their scepticism about the dangers of monopoly power - which makes them the reverse of Liberals. In fact, for some reason - and for discussion in another column - the Liberals allowed their central idea of free trade to be hijacked, turned inside out and made to mean the precise reverse of what it originally meant.

A doctrine that allowed the weak to challenge the strong has been allowed to bundle up the economically weak, and hand them over bound and gagged into the arms of the monopolies.

So what is changing? Well, absolutely nothing in the UK I'm afraid. But last summer, Barry Lynn, working on open markets at the New America Foundation and was sacked for criticising Google. He became a cause celebre, and has a head of steam behind his campaign against the emerging monopoly power in the USA, especially among the tech companies, Facebook, Amazon and Google.

I met him again a couple of weeks ago and he believes action will soon be taken. Among the people he saw in London was Vince Cable.

The central idea in the way of reform is that idea that, if the government gets out of the way - and businesses get as dominant in the market as they can - then consumers will always benefit. Research in the USA suggests this isn't actually the case.

Economists Jan de Loecker and Jan Eeckhout have found that prices are now 67 per cent above costs when they used to be just 18 per cent, and other evidence that consolidation is driving up prices. German Gutierrez and Thomas Philippon have also found that business investment as a share of GDP has been falling – probably because of the increasing market power of companies. See how Bloomberg reported the issue.

Ever so slowly, and not so far in the UK, the tide is turning - and researchers are waking up to the great fallacy we have been living under for the past generation. But the shift still needs to conquer the regulators, who remain largely in thrall to the old fantasies of the industrial age - of economies of scale and the other temporary truths of assembly line organisation. Even in 1994, the US Department of Trade opened 22 investigations into monopoly power. In 2015, it was three. In 2014, they didn’t open any.

Still, history is sweeping back into the economics of liberalism. It is time Liberals dusted down their own explanations before it sweeps past them.

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Wednesday, 7 February 2018

How to know if services work - do they give good help or bad?

The post first appeared on the Radix site...

I was a little late last night and nearly missed the Nesta event in London to launch the report they wrote with Osca. But I’m very glad I went, because I believe this one of those reports we will look back on as important.

It is called Good and Bad Help: How purpose and confidence transform lives.

This is the kind of territory that I’ve been working in for a couple of decades, about why public services succeed and why they fail. In fact, in 1990, I linked up with two friends to launch a ginger group called the Self-Esteem Network, dedicated to making self-esteem a political issue. Not a million miles from Good Help.

I can’t pretend it was exactly a success. I met some fascinating people and enjoyed singing some of the songs from the California state primary schools (“I’ve got self-esteem/Do you know what I mean?”) But I don’t think we cracked the two fundamental questions – what policies will effectively drive up self-esteem when it is lacking, and how do you know they are working?

The term is now dead. John Vasconcellos, the California assembly member behind the California task Force for Self-Esteem, has been discredited – quite unfairly. But the basic issue remains and the new report sets it out well.

It is this. If public services fail to treat those they are helping as people who might, with some help, drag their own lives back together, then their workload will get heavier and heavier.

What is inspired about the report is that its title sets this dilemma out clearly. Good help works, bad help doesn’t work – and we know a great deal about the difference. But most public services are not set up to provide good help.

The apotheosis of inflexible service delivery was reached, it seems to me, under Blair and Brown. I was disappointed that the coalition failed to grasp this nettle, though actually they failed to see it at all. So we now still live in the world of impersonal, digital-by-default, PBR services, delivered by impersonal, lobotomised – and possibly also bankrupt – outsourcing giants. Neither show much signs of being able to provide the Good Help we know works.

It is the same unfortunately the world over – increasingly expensive services that don’t work – and one of the reasons voters are so cross. I proposed a way of injecting flexibility into existing services in my independent review on barriers to choice in 2013, and something along those lines is going to be needed if we are to ever to forge an effective public sector again. And we have to if we are going to provide people with the Good Help they need. We know what to do – we’re just a bit hazy still about how to shift the existing system.

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Friday, 2 February 2018

The unexpected return of fairies

This post first appeared on the New Weather site...

The year: 1991. The place: a Cornish country lane. An anonymous man is driving at speed when he suddenly sees an old, swarthy-skinned man, about two foot high, pointing angrily at him.

He screeches to a halt and realises he is on the wrong road and that, if he had carried on, he would have driven over a cliff. “I consider this ‘pixie’ to have saved our lives,” he says.

The story is in a developing census of fairy beliefs in the UK and it is a strange one.

It is partly strange to be talking about fairies in 2018. Because last year saw the anniversary of the events of the Cottingley fairies, where two small girls claimed to have photographed some of them, playing around a small Yorkshire brook.

It took nearly 70 years for them to admit that the pictures were faked – though one still claimed that one of the pictures was genuine – but the damage had long since been done. It was difficult for people to admit they harboured vestiges of beliefs in fairies, referred to by the historian Ronald Hutton as “the British religion”. After the Cottingley pictures, such belief became almost impossible.

Yet when the anonymous author told a recent ‘fairy census’ about his Cornish ‘pixie’, categorising what he saw, he falls back on the old explanations. Because, despite Cottingley, people still seem to have experiences which they categorise as encounters with fairies. Not usually winged, and strangely often when they are driving – and nobody really understands why or what it is they are seeing.

That is the message of a new book called Magical Folk, edited by Simon Young and Ceri Houlbrook, a book of essays which brings the fairy tradition up to date. Simon Young is a folklorist who has revived the serious study of fairy beliefs by relaunching the defunct Fairy Investigation Society. This had been launched in 1927 by Quentin Craufurd, a former naval officer on the Dover Patrol, and at one stage boasted a membership that included Walt Disney and Air Chief Marshal Lord Dowding, the Battle of Britain victor.

By the 1970s, it had gone underground – fairies were deeply unfashionable – but Simon Young’s relaunch has also led to a major collection project in the form of the fairy census, which is not yet published (though the Cornish pixie story comes from there) but which demonstrates that people saw things they interpreted as fairies right into the current decade.

Perhaps most surprisingly, they see them also in London, or in their own homes. In the case of the harpist Elizabeth-Jane Baldry (one of the stories in the book), she saw one sitting inside her bin. Neither the book nor the census makes assumptions about what it is that people are actually seeing – or indeed whether they are actually seeing anything. It is the belief that matters.

It is hard to know what they see. Perhaps these are stories we tell ourselves based on peculiar psychic experiences, as Jung might have said. Perhaps they are actually seeing what they say they see. Perhaps people just register something in the physical landscape – a bird, a tree bending in the wind, animals moving furtively in the undergrowth, which their minds choose to interpret as the presence of fairies.

But why would they? We are all walking libraries of our cultural history, much of whose traces we remain consciously unaware of. They include millennia of stories in which we pattern our experience of the world to make sense of it. Whatever else they may be, fairies - like wood sprites and pagan gods - are also mythological manifestations that we project to manage our relationship to nature. In that sense, the rebirth of fairies is also a sign of a modern longing for nature.

There is a sub-classification of New Age which has for the last decade or so concentrated on fairy wings and fairy festivals. I have been fascinated with the idea for some time, but I’ve been careful who I tell. Some years ago, I wrote a novel about fairies (it is now called Leaves the World to Darkness): a major publisher was interested in publishing it – on condition that I took out the fairies.

Faced with this kind of official disapproval, it is hardly surprising that fairies dropped temporarily out of polite discourse.

It is now a century since Rudyard Kipling had Puck of Pook’s Hill claim that someone had “broken the hills” but found the fairies had gone. It looks as though, even in the era of Brexit, Trump and Google, there may be some flitting around.

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Friday, 26 January 2018

It isn't public versus private, it is small versus big...

Let me start with a story, which has to be a little obscure to protect the innocent. The government has a Voluntary Repatriation Scheme for asylum-seekers and refugees who find their home has changed, and who get employment back there. The scheme is administered by the Home Office, who hang on to the passports of those involved until the very last minute, in case they skip away.

It so happens that a friend of mine has applied to go home under this scheme. He is vulnerable because, after the traumatic scenes he witnessed, violence to his family back home, he has very little functional sight. The Immigration Service promised to return his passport at Heathrow before his scheduled flight.

They failed to do so. My friend was found after a day wandering around Heathrow in despair, having given up his home and everything he needed to exist in the UK. The police very generously drove him back to another friend’s house in Croydon. The Immigration Service said they would try again later in the week. It remains to be seen if they will succeed.

I tell this story partly because it makes me so angry and partly as an example of how the public sector can undermine people’s lives when the institution involved is too big to care about individuals. It is also a balance to the story of the collapse of the outsourcing giant Carillion.

Political discourse in the UK has been stuck on the issue of whether public works better than private or vice versa, and clearly both can rise to a challenge with the right kind of leadership and the right kind of scale. But it is scale that tends to be the deciding factor. And until we realise this, it s hard to see how we can do much to tackle the trail of incompetence at the heart of these stories.

It so happened that, as the Carillion story broke last week, there was more confirmation of this, in the latest Which? survey of customer satisfaction with energy supply. The biggest (Npower) came out worst, the next biggest came out next worse and so on – with the smallest rated best.

Here is the problem. When we hand over our services to machines, which are too big to care, then we hand them over to incompetence.

The problem with privatisation, which was supposed to make services more flexible, is that the services were normally handed over to deeply inflexible machines. That is the story of Carillion and so many other outsourcing giants which became expert at providing Whitehall with the data they craved but at little else.

For that reason, it seems to me that we are at an important turning point. The Carillion collapse marks the moment we will look back and see how the government began to re-examine their assumptions about economies of scale, and realised that – although they did exist – they are very rapidly overtaken by the diseconomies of scale which too often renders services so inhumane, so inflexible and so expensive.

This column first appeared on the New Weather blog.

Thursday, 11 January 2018

Vindication at last! Thank you, National Audit Office

It is a strange thing, vouchsafed to few of us, to find ourselves vindicated by the National Audit Office of all people.

Yet I have been. I have explained here and elsewhere that the reason why the Govia Thameslink and Southern rail franchise had been such a disaster was that they did not, and still do not, employ enough drivers.

It is true that industrial action has hardly been irrelevant, but the Secretary of State's (Chris Grayling) claim on the radio yesterday that it was all the fault of the unions has no foundation. It is based on a report he commissioned himself with a remit designed to look no further back than the start of the strikes. That was the purpose of the remit: so that, later, he could go on the radio and say precisely that.

No, the NAO report confirms, not just that GTR failed to employ enough drivers but that - as I have also explained here and elsewhere (see my book Cancelled!) - the franchise was so badly designed that GTR could only earn extra money by undermining passengers.

None of that was Grayling's fault. He arrived when the problems seemed overwhelming. The reason he really should have been shifted to pastures new is that he appears to be a tramline thinker, predictable and unimaginative - except in the dull, playground way that our political classes seem to do politics.

Why are the railways performing so badly? Why was Virgin given a huge extra payment for the East Coast franchise? Why was Govia so badly organised? The answer to all of them is the same - there are far too few private operators prepared to bid. And they are still dwindling.

This isn't just a rail problem either. A combination of shrinking budgets, giant contracts and monopolistic concentration has led to a similar issue across most privatised services.

To face this challenge, most of UK government - and Grayling in particular - go into battle, blaming the unions, spreading money to the remaining operators, and pretending there is no fundamental problem. Personally, it seems to me that the problem goes some way beyond private versus state - it includes why so few individuals want to run giant schools or hospitals just to be the punchbags of regulators.

In any case, this is unlikely to be a problem solved by re-nationalisation. Especially in rail transport, when those of us who remember the third-rate service provided by a state-run national British Rail, would prefer a more imaginative, democratic and devolved solution - probably mutualised too.

But if Grayling and his colleagues can think no further than blaming the unions, as they turn a blind eye again to the fundamental problems of market concentration, re-nationalisation is exactly what we will get.

Wednesday, 3 January 2018

The new radical centre requires new radical ideas

A version of this post first appeared yesterday on the Radix blog...

Cast your mind back, if you can, about 160 years to the end of 1858 – when the European crisis was emerging that would have a profound effect on politics in the UK.

There was the revolution under way that would see Garibaldi uniting Italy, and incidentally coining the word ‘Liberal’ (also the name of the patron saint of Treviso, by the way). There was tension with France that was leading to major rearmament on both sides (including the launch of HMS Warrior, still with us in Portsmouth).

As a result of this, and a combination of other factors, there was an increasingly close-knit alliance of political groups at Westminster. who were beginning to look to each other for support. In 1859, this was to emerge as the Liberal Party. The original meeting to form the new party, held in Willis’ Rooms in St James’ Street in London, and included well over two hundred Whigs, Radicals, Peelite Conservatives and pioneer Liberals like John Bright. When Lord Palmerston helped Lord John Russell up onto the platform, there was a huge burst of cheering.

At the end of 1858, to other intellectual giants were preparing their work for publication, which would emerge within weeks of each other. John Stuart Mill was putting the finishing touches to On Liberty; Charles Darwin was doing the same to On the Origin of Species.
So when we look ahead to our new year, 2018, we may see the beginnings of what may emerge as a new political tradition, born out of a realignment of the centre – and as the least sane members of the Conservative Party urge their leader to fling out Michael Heseltine, there may be some very big beasts indeed. But we should remember as that happens – and this is, I hope, the primary message of this blog for the year ahead – that new political alliances need new ideas if they are going to break out of the past.

In 1858/9, the ideas arrived as the party did. In practice, they were in the ether as the new grouping began to formalise itself and work together. The new party was not – because it could not be – some kind of compromised amalgam between Tories and Radicals. Nor did it really involve the humane elements of small-scale Liberalism that were to emerge within the first decade, but it was fuelled by the twin ideas of evolutionary progress and maximising liberty.

And when Radix co-founder Joe Zammit-Lucia said, in a letter to the Financial Times within the last few days, that the intellectual struggle for the new radical centre can’t be to defend the status quo, for example of the existing trading system, he was saying something similar.

It is, he said, “between those who cling to 20th-century thinking and refuse to address the shortcomings, in a 21st-century world, of the current international trading system and multilateral institutions that underpin it, and those who believe that survival of an open, peaceful world order depends on wholesale, radical reform…”
New political traditions require new intellectual underpinnings. In fact, I believe that one reason the Lib Dems found coalition such a bruising experience was that the intellectual underpinnings of the party needed renewal. They do so even more now.

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Tuesday, 12 December 2017

When Southern Rail is like HMS Queen Elizabeth

This post blew in from www.radix.org.uk ...

Yet another miserable journey home with Southern Rail (power supply problems again, or so they say), I found myself thinking about Britain’s brand new aircraft carrier, HMS Queen Elizabeth.
On the face of it, there are not many parallels – I’ve no doubt that the traditions of the navy will make it an effective, efficient and (if needs be) a heroic ship. Whereas Southern is a third-rate operation, and has studiously avoided being effective or efficient. Though managers and staff have occasionally had to be heroic.

But they do have one important element in common. Both are expensive symbols held up by the equivalent of scaffolding – gestures towards the nation we thought we were, rather than practical propositions to serve the nation in the twenty-first century.

Aircraft carriers are the central purpose in a naval task force designed to protect them. They require protection from air and submarine attack. They are the pinnacle of the naval pecking order and can pack a huge offensive punch – but only if the rest of the pyramid is in place.

And it’s not. The navy has a dwindling number of ships, with only a handful to discharge these kinds of duties – plus everything else (there are now a mere 20 fighting ships in the navy, plus ten submarines, compared to 69 plus 34 during the Falklands War in 1982).

Without that protection, the Queen Elizabeth – the biggest and most expensive ship ever commissioned into the Royal Navy – is just a symbolic gesture, a pretence, a dangerous con.

And so it is with Southern and their managers Govia Thameslink. They have the outward symbols designed to give the impression of providing a modern train service, but they lack the staff, the capacity and the sheer willingness to provide one.

Since Govia took over the franchise in 2015, they have removed the spare drivers that used to be rostered to fill in avoidable delays, and can also fall back on overtime. Instead of training more drivers, they use the spare ones to avoid paying overtime. There is no spare capacity at all. (see my short book Cancelled! for more details).

So though the old Southern Railways (died 1948) was known as a byword for efficiency, its successor is known as a byword for the reverse. Passengers taken ill, lorries hitting bridges, may not seem like their fault – but since they make no preparation for inevitable events (claiming this is efficient), the passengers suffer.

So on Friday, for example, they managed only 40 per cent within five minutes of schedule. As many as 30 per cent were more than 30 minutes late or cancelled.

The latest trick took me by surprise. Twice last week, and with no warning or apology, the train raced by Shoreham-by-Sea without stopping on its way to London. On both occasions, the member of platform staff was left to deal with the rage of passengers who had bothered to show up on time – only to be let down – without any information or explanation.

I have asked some of my usual informants (thanks so much, guys) and the consensus is that there has indeed been a change in policy in recent months.

There are reasons why their express trains might race ahead to Hayward’s Heath, after all. It maybe that the driver is due a break before his seven hour limit, and will need to take it – or to go home because, for whatever reason, their end of shift time is inflexible (picking up children from school for example). So if the train has been delayed, then they may have to race through – given that there are no drivers kept in reserve any more.

But the change in policy is in accordance with one of the recommendations in the Chris Gibb Report, some months ago – that controllers need to act much earlier to get services on time again after delays.

Hence the dashes past waiting passengers.

Of course, this is a much wider problem than just Southern, which is an extreme example of a very British disease. There is something admirable in controlling costs the way the UK system does, but when it happens at the expense of those services actually working, the whole system becomes insane.

It was a crucial moment, when civil servants realised they could pay for the outward manifestation – the shiny new trains, the new logos, the timetable or the aircraft carrier – while cutting out all the support infrastructure that would protect it and make it effective.

That is now happening throughout our services, perhaps primarily the result of a lobotomised civil service – who can’t distinguish between the political needs of their masters and reality.

Maybe it doesn’t matter in the future of the nation that we can no longer rely on our trains, but when we have the outward manifestations of military force but none of the safeguards, then that is extremely dangerous. For all of us.

The British disease the lies in the inability to tell the difference between a real institution and one that has no infratstructure to support it. Which is why we have a railway franchise like Govia Thameslink with no reserves for when the weather strikes or the signals fail.

It is why we have an aircraft carrier without the escorts needed to protect it. It is why we have hospitals and schools that meet targets but fail as human institutions.

That is the tragic inauthenticity of Brexit Britain: a fake efficiency that – as anyone who travels by Southern knows – is actually extremely inefficient and ineffective and therefore wasteful.

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