Where will it end?

The financial crisis has loomed heavily over government decisions since the Coalition came into power in the UK. In order to alleviate the pressure this has put on all areas of the economy several policies, like the National Loan Guarantee System, have been directed towards the task of making credit available for small businesses (BBC, 2012).

First-time and potential home owners have also been targeted with assistance, with schemes being launched to make mortgages more accessible (Osborne, 2012). But these policies have risked lurching into the desperate, as the quest for economic growth continues. The latest proposals from the Liberal Democrats involve clearing the way to parents and grandparents using their pensions to guarantee their children's mortgages (Mulholland, 2012).

Critics have urged caution (Parkinson, 2012). The use of pensions as collateral is a risky move - potentially gambling a person's retirement on the ability of a new home owner getting (and staying) on the property ladder. There is a significant worry that the plan has been developed to offer some short term growth boosts at the risk of longer term dangers.

These fears run parallel to those that have surrounded the cuts agenda. From fear of the long term effects of large-scale unemployment on the UK's social fabric, to the long term effects of cuts to education funding - the primary concerns about the Coalition's economic strategy appear to be the narrow focus on the here and now.

These arguments were presented with some particularly damning evidence in July, when tax receipts were substantially less than expected (BBC, Aug. 2012) - necessitating the borrowing of around £600m. Despite news that the UK is recovering from recession, albeit slowly (Rowley, 2012), there remain concerns that austerity has 'choked off the recovery'; in particular, The Economist warned against interpreting the meagre recovery as an opportunity for more cuts.

In his critique of Mr Gordon Brown's time as Chancellor and Prime Minister, Professor Stein Ringen called Labour's time in government a failure (Ringen, 2009). Professor Ringen suggested that statistically their effect upon various important policy areas had been negligible - even though they possessed massive funds for investment, had no shortage of power and demonstrably used both to exercise control. The problem he points to is instead an economic approach that was 'poor value for money'.

It is this same trap that the coalition is at of risk falling into, but with the complete opposite approach to public investment. The short term focus on proving Labour's economic ineptitude, the short term focus on eliminating debt & deficit, and the search for policies to provide short term economic growth - there is a danger that the huge long term cost of the cuts might have stymied the short term recovery, while offering little of value in return for the long term development of the UK.

The Liberal Democrats went into the 2010 UK general election with plans to revitalise the economy by reorganising the banks to get credit flowing and making public investment available for numerous regeneration projects - not least the refitting of shipyards into centres for green energy production (Telegraph, 2010). These are policies with real consideration for long term concerns - for increasing jobs, skills and production; and lowering energy prices by increasing competition, thereby decreasing the financial pressure on both consumers and businesses.

However, the grim state of the economy served as the spur for Lib Dems to join the Tory led Coalition in focusing instead on the short term goal of deficit reduction - a goal to which numerous public investment policies were sacrificed, not least university funding (BBC, 2010). Those prior policies could be providing a much needed boost right now as energy prices continue to rise. Yet they seem to have disappeared under what began as a temporary redirection of focus, but has become an entirely new direction.

Before these proposals for using pensions as mortgage guarantees comes to fruition, serious concern needs to be given to the long term effects of such a policy. In the scramble to make credit available in an economy where too much money is getting stuck too far up the ladder, policy makers need to start considering whether more debt and credit is the answer to problems caused by debt and credit? What will this open the door to? Where will this end?

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References:
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+ BBC's 'Bank lending scheme targets smaller businesses'; 20 March 2012.

+ Hilary Osborne's 'Funding for Lending scheme launches amid scepticism'; in The Guardian; 1 August 2012.

+ Helene Mulholland's 'Nick Clegg: parents can use pension pots to help young people buy property'; in The Guardian; 23 September 2012.

+ Justin Parkinson's 'Lib Dem conference: Pension funds could back mortgages - Clegg'; on the BBC; 23 September 2012.

+ BBC's 'UK government borrows £600m in July as tax receipts dip'; 21 August 2012.

+ Emma Rowley's 'GDP figures show Britain's double-dip recession is over'; in The Telegraph; 25 October 2012.

+ Stein Ringen's 'The Economic Consequences of Mr Brown'; on RSA Animate; 14 September 2009.

+ The Telegraph's 'Nick Clegg wants disused shipyards to become production centres for wind turbines'; 11 February 2010.

+ BBC's 'Tuition fees vote: Plans approved despite rebellion'; 9 December 2010

Redirection

Leadership isn't always plain sailing and Liberal Democrat leader Mr Nick Clegg has learned it the hard way. After two and a half years of pushing for the coalition to co-operate in a grown up and meaningful fashion (White, 2012), Mr Clegg has encountered an obstacle.

Last month he saw his work come seemingly to nothing when Prime Minister Cameron and his party failed to honour the coalition's agreement to reform the House of Lords (BBC, 2012). This roadblock forced a response from the Liberal Democrat leader. A new combative attitude was on display (and celebrated) at Deputy Prime Minister's Questions (Lindsay, 2012). But that is only a part of the story.

Mr Clegg recently revealed he'd had "lengthy conversations" with several senior Labour figures (Mulholland, 2012), confirming the reports in an interview with Andrew Marr:

"Grown-up politicians talk to each other across party lines. Over the last few weeks I have had lengthy conversations with Ed Miliband, David Miliband, with Tony Blair, with Peter Mandelson … talking about Europe, talking about political reform."

Changing tides call for changing tactics. And its not just the Lib Dems who are looking for a new direction. The Tories, who it has been suggested are also fearing defeat (Toynbee, 2012), appear to be looking for a new direction. The recent cabinet reshuffle, which strengthened the hand of the party right, was followed by hints of the possibility for a future Tory-UKIP alliance. The leader of UKIP suggested that his party might (under certain circumstances) be a possible alternative to the Liberal Democrats as Tory coalition partners, if needed, after the next election (Davies, 2012).

For leaders, its not always enough to direct efforts towards an uncompromising goal set by a predetermined plan. Stagnation, decline and obstacles unforeseen, can all force leaders to consider new directions (Johnson et al, 2001). As relations within the Coalition become strained, the leaders of both sides must start looking for an insurance policy.

In their attempts to redirect their parties, leaders will have to redefine them - an action that always risks creating identity crises amongst followers. In any crisis there are opportunities - for those within the group and those outside - to influence the outcome. While the Coalition tries to redefine its own identity, the Labour party, the Green party, and other third parties have a chance to affect the course of these debates and the new direction of political discourse.

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References:
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+ Michael White's 'Nick Clegg lead Lib Dems in shunning "tribalism"'; in The Guardian; 25 September 2012.

+ BBC's 'Nick Clegg: Lords reform plans to be abandoned'; 6 August 2012.

+ Caron Lindsay's 'Nick Clegg gets sassy at DPMQs'; Lib Dem Voice; 17 October 2012.

+ Helene Mulholland's 'Nick Clegg: parents can use pension pots to help young people buy property'; in The Guardian; 23 September 2012.

+ Polly Toynbee's 'George Osborne's strategic mind? Long may it continue to whirr'; in The Guardian; 4 October 2012.

+ Lizzy Davies 'Ukip says no Tory election deal without EU referendum pledge'; in The Guardian; 21 September 2012.

+ Alan Johnson, Colin Barker & Michael Lavalette's 'Leadership & Social Movements'; Manchester University Press, 2001.

Fresh Starts

Following heavy defeat at the 2011 federal election, the Liberal Party of Canada is burnishing itself with a fresh start. Canada's longest lived federal party is hoping to rebuild its fortunes through a leadership election.

That leadership election took off in earnest last week when Mr Justin Trudeau officially launched his campaign (Naumetz, 2012). Since arriving on the political scene, as the son of former Premier Mr Pierre Trudeau, he has been courted as a future party leader (Greenway, 2008). Yet so far he has a lean record when it comes to policies.

Now the moment has come to clearly lay out the policy platform for a liberal future. When doing so there are a few things for Mr Trudeau and the other candidates to consider.

It has been covered previously on this journal that the UK's parties of the left have had plenty of lessons in cooperation to take from the Canadian left. Now, however, Canadian liberals have plenty of reasons to watch Mr Ed Miliband's progress as leader of the Labour Party in the UK - to study how leadership elections affect parties, what issues are affecting people, and what methods may or may not work.

A primary issue for the Liberal Party of Canada will be addressing the unexpected collapse from last year's election - not to mention a long term polling slump that still hangs over their heads (White, 2011). But a new leader is no sure salve: UK Labour's new leader Mr Ed Miliband has had a rocky ride since his election - which was won only by the narrowest of margins. He has tried to cast off the towering shadows of Mr Blair and Mr Brown (Telegraph, 2011) and rebuild the party's reputation. But such shadows are hard to shake.

And those inherited troubles have lead Labour, and will lead the Canadian Liberals, down a difficult road. Labour have had to try and rebuild their much maligned economic credibility (Elliott, 2012), which was so sorely strained over the course of the election - and afterwards when the full scale of public debt came to light. Overcoming those stigmas has lead the party to alienate some of its core support by backing the theme of the government's economic approach - even as they oppose the details (Wintour, 2012).

The Canadian Liberal party will need to avoid such alienation of its core supporters as it looks for a solution to the number of voters who have moved over to the Conservatives. While the easiest route will surely be to try and match their opponents blow-for-blow, there are alternatives - not least providing a realistic, practical and affordable way to assuage the fears that have driven voters over to a Conservative majority.

A third lesson should also be taken from UK Labour's leadership election. The favourite, Mr David Miliband, lost narrowly to the his brother Mr Ed Miliband - a point particularly pertinent to the favourite in the Canadian Liberal leadership race, Mr Trudeau. Nothing can be taken for granted.

Canadian Liberalism needs to be wary of the selfish path to short-term polling success. While effective at putting a party on the radar, it also breeds instability, alienation and dissatisfaction down the line - as UK Labour saw when its long-term policy of establishing itself as the sole bastion of the UK's political left has seen the party lose ground to left alternative parties across the last two elections. The question then becomes: how do you build a core of support and a framework of policies while avoiding the alienation of potential allies?

Beginning to answer that question will mean restating the values of liberalism and figuring out how those words translate into policy in the 21st century. And that means finding a starting point, something like the words of that former citizen of Mr Justin Trudeau's constituency,  Louis-Joseph Papineau (1867):

'It is to my fellow-citizens of all origins that I call on today as I always did; to them I say that we must not only be anxious to preserve the rights which are acquired, but that, by free discussion, we must unceasingly endeavour to acquire new ones.'

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References:
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+ Tim Naumetz's 'Trudeau makes it official and Liberals riding a wave of voter interest, 30,000 outside party sign up for leadership election';in Hill Times; 3 October 2012.

+ Norma Greenway's 'Justin Trudeau top pick as Liberal chief: poll; But rookie MP says he's not interested'; in the Montreal Gazette; 29 October 2008.

+ Anne White's 'In Canada’s election there have been two surges: the far-left in Quebec and the far right in the rest of Canada. The result bucks the recent trend of hung parliaments and may offer some lessons for the UK'; on British Politics and Policy at LSE blog; 5 May 2011.

+The Telegraph's 'Ed Miliband tells 2011 Labour Party Conference "I am my own man"'; 27 September 2011.

+ Larry Elliott's 'Labour still has a long way to go to restore its economic credibility'; in The Guardian; 30 September 2012.

+ Patrick Wintour's 'Ed Miliband backs Ed Balls's stance on spending cuts'; in The Guardian; 15 January 2012.

The success of co-operatives

2012 has been the United Nations International Year of Co-operatives, and at the end of October celebrations will culminate in a festival in the City of Manchester. The year of the festival seems well timed, considering the recent strength of co-operative organisations.

This strength was demonstrated just two months ago when the the The Co-operative Banking Group spent around £400m (possibly rising to £800m) on the purchase of a large number of Lloyds branches - a deal that increased the Co-operative Group share in the current account market to around 7% (BBC, 2012). These successes have not been limited to banking either. Farming Co-operatives of various sorts have been starting up and expanding (Bourne, 2012); in the Basque Country, Mondragon, a co-operative working in machine assembly, has laboured on and protected its employees even during the worst of the financial crisis (Burridge, 2012).

And it seems that (at least a part) of the UK Government has started to take notice. In January the Liberal Democrats advanced proposals to put workers closer to company decision making processes (Clegg, 2012) - a move to counter the re-emergence of the mismanagement that has been strongly tied to the causes of the financial crisis.

Co-operatives, building societies, credit unions: these organisations have yet to be perfected. Each have had their share of issues throughout the past decade, even if they have shown themselves to be very competitive. Last summer the Co-operative Group began seeking a buyer for parts of its insurance arm and just last month claimed worse than expected profits.

But in the face of the most recent financial meltdown, people are taking a fresh look at how to get democratic values into the heart of business. The reasons are twofold: it is primarily the long-awaited next step in the advance of social democracy, but its also serves as a means of building greater stability into businesses. Co-operatives, thanks to their resilience, provide a sound foundation for building towards those aims.

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References:
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+ BBC's 'Co-op to buy 632 Lloyds bank branches'; 19 July 2012.

+ Nick Bourne's 'Fruit and vegetable community co-ops rise to 350 in Wales'; on the BBC; 9 May 2012.

+ Tom Burridge's 'Basque co-operative Mondragon defies Spain slump'; on the BBC; 14 August 2012.

+ 'Nick Clegg calls for a 'John Lewis economy'' on the BBC; 16 January 2012.

Renewals

Cabinet reshuffles, like that of Mr Cameron's last month, are a fact of political life. They serve as a way to reorganise, to break from certain continuities or to shed unfortunate reputations that have been accumulated.

In 2003 Mr Blair reorganised his cabinet amongst much controversy (Jones & Rozenberg, 2003). His cabinet changes reformed and watered down the the role of Lord Chancellor (Wintour & Dyer, 2003). The changes came at a time when, after the outrage sparked by protests and resignations over the Iraq War, Mr Blair's New Labour were in need of reasserting their reforming credentials.

So what are the aims behind Mr Cameron's new cabinet?

Commentators are suggesting this reshuffle is a move to, or at least a concession to, the Tory Right (Clark, 2012). Such an attempt to shore up his support may reflect the difficulties the Prime Minister has faced. His role has consisted of trying to juggle party demands past his Liberal Democrat coalition partners (Stevenson, 2012).

There is danger, though, in being drawn in too far by these reshuffles. Methods such as these - used to manage public perceptions of government action - are reflective of the unfortunate role that personality plays, ahead of reason, in the formulating and carrying out of policy (although there have been attempts to rectify this).

This amount of focus given to personality allows ministries to get rid of bad impressions with an outgoing minister, and to press on from any newly established policy plateau - all without the baggage that comes with unpopularity. In this case, the reshuffle betrays concern in Tory ranks about their chances at the next election.

Changing faces, changing personalities - these are just misdirections to ease the passage of difficult legislation. The realities are always more complicated. We must be wary not to let misdirections such as these distract us from maintaining vigilance against dangerous legislation.

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References:
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+ George Jones & Joshua Rozenberg's 'Blair casts aside legal history in radical reshuffle'; in The Telegraph; 13 June 2003.

+ Patrick Wintour & Clare Dyer's 'Blair's reforming reshuffle'; in The Guardian, 13 June 2003.

+ Tom Clark's 'Cameron's new cabinet: not just a shuffle but a great trek to the right'; in The Guardian; 4 September 2012.

+ Alex Stevenson's '"Chambermaid" Cameron told to stand up to Lib Dems'; in Politics.co.uk; 30 August 2012.