Jeffrey Tucker interviews Thomas E. Woods. Jr about his book, We Who Dared to Say No to War
I had a meeting two years ago with James Forsyth, the editor of The Spectator, and talked about the alternative world of Austrian Economics, how many of its economists had predicted boom and bust, etc. He was very attentive. I am glad to see this article in this week’s edition, drawn to my attention by Daniel Hannan.
The Wealth Manager, Tim Price, is clearly aware of the Austrian School and may well use some of the key insights to invest. He quotes Prof Jorg Guido Hulsmann and his book “The Ethics of Money Production.” This is a must read for anybody interested in how the government are destroying your wealth and will continue to do so until the production of money is taken out of their hands. The full text can be downloaded here .
Following the Robert Peston BBC 2 documentary “Britain’s Banks: To Big to Save?” I was invited to appear on the Jeremy Vine Show yesterday (my segment starts 1 hour and 8 minutes in). I was introduced as the fishmonger who wanted banks just to keep my cash in a safe. This was unfortunate, as I seek to have banks give their clients the option of safe keeping their money or lending it for a duration the depositor is happy with (3 months, 6 months, 9 months, 12, 18, 36, 60 months, etc), with an increasing rate of interest to reflect the sacrifice the depositor is making to suspend consumption now and defer it to a future date. Robert Peston came on to explain the basic working of the banking system, i.e. we deposit, they lend out. This means the money is on the whole not in the bank, but lent to mortgage holders and entrepreneurs. If a number of people want it back all at once, then the bank will fail as it has lent the money out. David Buik of BGC Partners came into explain the essential nature of this banking service. He explained the chief reason why this system fell apart at the time of Northern Rock: it was that the interbank lending market dried up and banks could not borrow short term money off each other to pay redemption requests from their customers. If we have more of a capital buffer to absorb losses and more reserves, this type of event, more than likely, will not happen again. This was his essential message. I asked if he thought it was wrong that a bank can take your money and place it on deposit and tell you that you have instant access to it, in the sure knowledge that they have lent it long, sometimes for many years. He replied of course he did not agree to that. Interestingly, the comments flooding into J Vine were more often of the variety, “if you kept all money in the safe / vault, there would be no lending”, the implication being that the world as we know it would come to an end. There is an art to communicating that I must be lacking. It seems so simple to me, that instead of fumbling around in Switzerland dreaming up more and more regulation, more and more controls, and likewise doing that in each and every central bank and government around the globe, just do what was proposed in parliament recently. Allow people to choose whether their money is safely kept in the bank’s vault (for a modest fee) or lent out, for a specified duration. Then banks will have to lend money to people and enterprises and match their borrowing to their lending. Pension fund and Life companies that currently take in very long term savings (i.e. up to the duration of your life) are ideally placed to lend long to people who need long term debt. God forbid, we might even get back mutually-owned building societies where you historically saved long and they lent long. What could be simpler? Why have we made something as basic as banking, which should be a solid and boring thing, so complicated and so hard for people to understand? P.S. The producer of the program gave me a hat tip to watch Inside Job, a documentary film that he had screened for his staff. Clearly, I am glad to say, the Beeb are taking their research into this matter very seriously. I can’t comment on the film, not having seen it, but from the reviews it does seem to be a must-watch for all people interested in what has happened and continues to happen to our money when it gets into these banks.
Lord Adonis was one of the original founders of New Labour. He helped make that political party electable. He created the modern Academy program for schools and in his last role as Secretary of State for Transport, he pioneered the establishment of High Speed Rail. Recently he made a speech in Birmingham setting out a new vision for our cities that would have chimed well with the great entrepreneurial builders of our great cities in the Victorian era. Our past is inspiring but so too can our future be. When he sent me a copy of this speech I noted the following and commented back.
The civic spirit that these pioneering social orientated capitalistic entrepreneurs in the Victorian era needs to be revived. State action will never achieve what you aspire to, only these truly remarkable individuals. The State can provide a mechanism like the Academy architecture that you set up and the Mayoral Office legislation (if it is assumed that we need State structured education, and that people are not responsible enough to provide for themselves), but never the entrepreneur, the doer, the undertaker of tasks. Technicians can’t perform this regeneration. The focus should now be on energising the individual to think he is empowered to really make a difference in Birmingham. It is incumbent on the political class to call out for these inspiring individuals and tell them they are emancipated to revitalise our cities. No corporation tax, no NI for business under £5m of revenue, and no capital gains tax on the sale of business will soon revolutionise this area. The quicker the State can remove itself from being a key income provider in the area, and the quicker it will get off the back of enterprise, the quicker will be the recovery of this great Victorian city of thousands of flourishing business. If the government gave a commitment for 10 years to hold this tax advantageous structure, then tapered over 5 years up to national tax rates, transformation would happen. I am now against HS2. Not because high speed rail is not a good thing; it 100% is. But it can’t be funded by the taxpayer. It needs to be funded as all prior great railways were funded: via the private sector. Railway bonds paying a 7.5% coupon need to be offered. With the government sucking the life out of the private sector with its debt issues to plug the gap in the deficit, it is the biggest competitor for funds. The more we give the recipients of welfare, squander in the form of bombs on Libya, and subsidise crony capitalism within the banking system, the less we have for on-going sustainable growth in the private sector. A great speech, well made, and I hope it gets some traction.
Birmingham Unleashed An Elected Mayor, High-Speed Rail and Academies Andrew Adonis Lunar Society Annual Lecture Birmingham, 15 March 2011
As an Arsenal supporter, I know never to underestimate Birmingham City. Not only because of the Carling Cup, but also because, living in Highbury, I am conscious that when Joseph Chamberlain – in many ways the creator of modern Birmingham – was sent from London to Birmingham at the age of 18 in 1854 to work in his uncle’s screwmaking business, it was No. 25 Highbury Place that he left; a house he loved so much that when he built a mansion in Birmingham he called it Highbury. Our loss was your transformation. My only excuse for offering gratuitous advice this evening is that you asked me for it, and I could hardly decline a request from an institution of such prestige as the Lunar Society. But there is another reason I am here. I care passionately about the future of our cities. Nearly half of Britain’s population live in conurbations. Birmingham dominates the second largest. There was hardly a month as a minister when I was not in Birmingham on some business or other, and I am convinced that there is no bright future for Britain unless there is a bright future for Birmingham. You have imposed on me the obligation to consider how the city’s future can be secured, so here goes.
In my view, Birmingham faces something of a crisis. The city has great strengths. Natural strengths of location in the heart of England. Strength and pride in ethnic diversity and an instinctive internationalism. Great cultural institutions. It has built on these strengths in recent years. The city centre is rejuvenated: Symphony Hall, the canal district, the International Convention Centre, the National Indoor Arena. New Street Station, one of the worst eyesores in Britain, is being rebuilt, thanks to creative leadership by Mike Whitby – just as Dick Knowles and Albert Bore before him deserve great credit for the ICC and NIA. There are three popular universities. The city’s schools have improved. The NHS is in good shape – new and rebuilt hospitals; a strong and growing health sector. But while all this and more is positive, the big picture for Birmingham looks bleak to me unless there is big change. Not more incremental change, but radical transformation under strong, purposeful civic leadership. Birmingham’s population is still 100,000 down on its peak fifty years ago. Despite this – or partly because of it, urban economists tell me – the city’s unemployment rate is more than twice the national average, now at over 11 per cent, whereas London and Leeds are only marginally above the national average. Birmingham also has one of the lowest employment rates in the country, 61 pc against 70 pc nationally. London and Leeds, again, are at about the national average. This relates to two further stark facts: Birmingham has very low productivity and is excessively dependent on public sector jobs. In Birmingham’s shift from manufacturing to services over the last 35 years, public services have predominated. One in three jobs in the city are now in public services, compared to one in five in financial and business services. Only one in ten jobs are now in manufacturing. Type “Made in Birmingham” into Google Search, and the first item listed is: “Birmingham’s Industrial History Website” – together with a tag: “Please note: this website is currently being rewritten.” It doesn’t need to be rewritten; it needs to be replaced, and urgently, by “Birmingham’s Industrial Future Website.” But that future is at the moment is hard to see with any clarity. According to economic projections prepared for the city council, Birmingham’s employment is forecast to be 4 pc lower in 2020 than in 2008. In the five years to 2008 the city gained 10,000 public sector jobs but lost 3,000 private sector jobs. Now the losses in the public sector are starting too. A month ago the city council announced 2,000 job cuts, with many more to come. Stephen Hughes, the council’s chief executive, was quoted as saying: “The scale of cuts is likely to be of a magnitude that no one has seen. My life in local government goes back to 1979 and there has never been anything as bad as this.” I’m not sure this will console the city’s army of future unemployed. Underpinning all this is the most worrying statistic of all. Birmingham almost tops the league of Britain’s low skill cities. More than two in ten of the city’s residents have low skills, compared to just over one in ten nationally. Greater London, by contrast, is now better than the national average in skills. Of Britain’s major cities, only Leicester is worse placed than Birmingham in skills. Birmingham is behind even Liverpool, which has lost nearly half its population in the last 50 years. Given Birmingham’s poor employment and skills base, the deep deprivation which afflicts so much of the city is not hard to explain. Nearly two-thirds of children in the city live in households with low income. Infant mortality – incredibly – is almost twice the national average, worse than in Cuba and on a par with Bulgaria and Chile. Using international income per head data for cities worldwide, Birmingham ranks below seven German cities: Munich, Frankfurt, Nuremberg, Hannover, Hamburg, Cologne and Stuttgart. I was in Stuttgart last week – a city with a similar industrial pedigree to Birmingham. The city centre is dominated by a giant Mercedes logo, and it doesn’t mark an industrial history museum. Type “Stuttgart, famous, why?” into Google, and this is what you get in the first result: “The area is known for its high-tech industry; some of its most prominent companies include DaimlerChrysler, Porsche, Bosch, Celesio, Neoplan, Hewlett-Packard and IBM, all of whom located their world or German headquarters here …. The region currently has Germany’s highest density of scientific, academic and research organisations, and tops the national league for patent applications.” By contrast, the equivalent search result for Birmingham is, again, mostly a history essay on the city of a thousand trades. I could go on, and I know many of you could too, judging by my conversations and reading of Birmingham’s media and business websites while preparing this lecture. However, I have not come here to spread gloom. My political hero Roy Jenkins – MP for Stechford for 27 years, who loved this city, albeit mostly from afar – used to say that to be half good as an adviser you need to argue to solutions, not conclusions; and that to be half good as a leader, you need the courage to implement the best solutions. The other half, he said, was down to luck. So I have three big solutions to suggest to tackle three of Birmingham’s biggest challenges. An elected Mayor to provide much stronger and more effective civic leadership. High-speed rail to transform your transport connections and massively to intensify the benefit of your geographical position in the heart of England. And the conversion of all Birmingham’s lower performing schools into academies, to transform school standards and skills and to link the world of school to the world of work, apprenticeships and higher education in wholly new and better ways. These are not of course complete solutions even to these three problems:
- A Mayor is only the beginning of what it will take to generate strong civic leadership and better public services – and he or she is only one part of what it will take to generate a step-change in business creation and investment.
- High-speed rail transforms Birmingham’s national and intercity connections, but the city also faces major challenges in urban transport. I could deliver a whole lecture on that subject alone, but let me just give you a few facts for the first Mayor of Birmingham to contemplate. Bus usership in London has doubled in the last 25 years; in the West Midlands it has slumped by a third; yet last year National Express, who run most of your buses, recorded a £160m profit while fares rose in the city by up to 9.5 pc as bus usership fell still further. If Centro, the Integrated Transport Authority, has a credible plan to tackle this, I haven’t noticed.
- As for education, Birmingham faces major challenges in under-five, further and higher education, as well as schools, and it is only the last of these that academies directly impact. I would note, for example, that you have three popular universities, yet – despite being Britain’s second city – Birmingham has no research university in the international league of a string of London institutions, and several others besides. While a Mayor could make big and immediate improvements in schooling, which is a direct city council responsibility, there is plenty of work in the city for university entrepreneurs too, and I know that your excellent vice-chancellors appreciate this.
So with inevitable caveats, let me sketch my view of a plan for Birmingham in respect of a Mayor, high-speed rail and academies.
A Mayor for Birmingham
Let me give you my frank opinion, as one who has dealt with Birmingham City Council a good deal in recent years. The city needs to raise its game significantly in terms of leadership, performance and strategy. I don’t put this down to individuals so much as to the system, in particular the failure to follow London a decade ago in creating a Mayor able to provide stronger leadership. I can immediately hear the riposte that London is different because the Greater London Authority is a strategic authority, responsible for transport, policing and economic development, and there are the 32 boroughs underneath with the responsibilities of Birmingham city council. Of course, no two cities are alike, but I wouldn’t allow the contrast to be explained away so easily. In the past, the patchwork and often conflictual character of London’s governance has been held to be its greatest weakness. By contrast, Birmingham, as the largest single-tier local authority in Europe with a £4bn annual budget covering a population of a million, could have the best of both worlds: an authority which, because of its size and reach, is the strategic leader for the region, able to significantly influence what it does not control – including transport, policing and economic development – while also possessing the advantage of direct responsibility for key public services, notably schooling, which are critical to the city’s future prosperity. Instead, the city council has had something of the worst of both worlds. Weak strategic leadership alongside average (at best) improvement in the public services under its direct control. Take education, which I know only too well from constant interaction with the city council. Secondary school standards in the city are now, at last, approaching – although they are still below – the national average. But promoting reform to secondary education in the city has been like pulling teeth. I cannot tell you how much agitation, and how many difficult meetings, it took to persuade the City Council – particularly the inward-looking children’s services department, repeatedly censured by Ofsted in recent years – to engage half seriously in the academies programme, which by harnessing the dynamic energy of outstanding education, voluntary and business sector sponsors is transforming school standards in so many disadvantaged communities nationwide. And this despite the fact that huge investment was on offer. Let me illustrate with a few facts. Only 9 per cent of Birmingham’s schools are academies or planned to become so. In Croydon in London, the figure is 28 per cent; in Southwark, 53 per cent; in Hackney, 38 per cent. In the city of Bristol it is 42 per cent. Southwark, Hackney and Croydon are all now above national average in their secondary school performance, although the first two were well below Birmingham six years ago – indeed ten years ago they were by-words for chronic failure. And Bristol is improving faster than Birmingham. That’s just academies. I won’t venture into child protection and children’s social services, where simply providing an adequate service, let alone engaging in transformational change, has proved beyond the city. All this comes down to leadership and strategy. Indeed, the failure to establish a Mayor a decade ago was itself a failure of political leadership on the part of the City Council – because, as you know, the city’s electorate voted for a Mayor in a postal referendum with a respectable turnout, but the voters divided between two mayoral options and the council refused to establish the office, although Albert Bore, then Leader of the Council, was in favour. It is hard to be an effective leader if people do not know who you are. Do you know anyone who can’t name the Mayor of London? I barely ever meet anyone outside Birmingham who can name the Leader of Birmingham. That includes a conference of local authority chief executives I addressed before Christmas, where I asked the direct question of the entire conference, and no-one could name him. Stephen Hughes wasn’t present, I hasten to add. They all knew who was about to become Mayor of Chicago. I’m not sure that the recognition factor is that high even within the city. To make this point less impressionistic, a researcher at the Institute for Government compared Birmingham’s leader with the Mayor of San Jose in California and with the Mayor of Cologne. San Jose and Cologne are cities around the size of Birmingham. Chuck Reed in San Jose has a web presence 33 times as great as Birmingham’s leader; Jurgen Roters in Cologne has a web presence 19 times as great, and he has only been in office for 18 months. But one does not need to look abroad. A New Local Government Network poll conducted during the first term of elected mayors found that, just 18 months after being elected, on average 57% of people could identify their mayor, compared to only 25% who could identify their leader in councils without a mayor. In politics profile is not all. But to wield significant democratic power and influence, people have got to know who you are, and they have got to believe that you can make a difference. Invisible leadership doesn’t generally work in democracies. What difference could Mayoral leadership make? I have already spoken about jobs and education. Let me tell you also about my experience as Transport Secretary. I can say with absolute certainty that London would not have got and kept Crossrail without Ken and Boris. It was a hugely difficult and complex deal, pushed forward at every stage by the two Mayors using their formal powers, political authority and persuasive and media skills to the full. It involved the Mayor putting together not just the Treasury, the DfT, the GLA, the City of London Corporation and the boroughs within the public sector, but also a heavy duty partnership with the private sector because of the necessity for large corporate contributions and the agreement of business leaders to the highly innovative business rate supplement. Then there is the Olympics, which I very much doubt London would have won without Ken guaranteeing that transport and other infrastructure would be sorted. Nor, without a Mayor, do I think it conceivable that there would now be a congestion charge, nor a transformation of the bus network, nor the Boris bikes – if Barclays thought they would be known as the Barclays bikes, they were rather naive. Only in airports policy has London failed significantly in the last decade, largely because Boris decided to go for a pie-in-the- sky estuary airport rather than back a third runway at Heathrow after the completion of Terminal 5. But in that respect I note that Birmingham still hasn’t got its runway extension, as year succeeds year and the necessary deal is still not clinched. By now you may have gathered that my view is that you can’t elect a Mayor soon enough. I mentioned earlier that on the key measure of low skills, only Leicester is below Birmingham. Leicester has just decided to create an elected Mayor. The first election takes place in seven weeks time, and last week Sir Peter Soulsby, the city’s senior MP, resigned from the House of Commons to stand for the new post. In even nearer Coventry, the city’s senior MP, my former Cabinet colleague Bob Ainsworth, influenced in part by events in Leicester, tells me he is keen to do the same and seek to become the city’s Mayor if it votes to create one in a referendum to be held in May 2012. Under the Localism Bill, Birmingham too has the chance to start the mayoral process with a city-wide referendum in 14 months time. If Birmingham votes yes, the first Mayor will be elected in two years time; there is no scope this time for the Council to stand in the way. It is good to see candidates already coming forward, and starting to set out their stalls. Birmingham needs an open, intense debate about its future. The Mayoral election provides the opportunity for this debate, and for action to follow if a Mayor is elected on a clear mandate for change. There are other issues to be considered in Birmingham’s governance. Does the City Council really need 120 members – 20 more than the United States Senate? Parliamentary constituencies in the Commons don’t each have three representatives – if they did, the House of Commons would have 1,900 members. Then there is the relationship of Birmingham’s government to the new Greater Birmingham and Solihull Local Enterprise Partnership, to the Integrated Transport Authority Centro, and to the new West Midlands Police and Crime Commissioner to be elected in May 2012. All these relationships are important, sensitive and problematic. I would just make one general point. If you have a strong, effective Mayor, the promotion of the interests of the city regionally, nationally and internationally will be significantly enhanced. Not only Birmingham, but the West Midlands at large, will benefit. Let me offer one final reflection on the mayoral debate. The Birmingham media is largely pro-mayor and critical of the status quo. But it does not have strong penetration, and has only a limited capacity to promote change. The Birmingham Mail and Birmingham Post have a combined circulation of only 60,000. By contrast, the Coventry Telegraph, serving a city a third of the size, sells more than half as many copies as the Mail and Post combined. It is almost embarrassing to mention London’s Evening Standard with its circulation of 700,000. Penetration of radio and TV news is also comparatively weak. ITV doesn’t even have a West Midlands region for news, just a massive Central region which covers the entire East and West Midlands from Lincoln to Shrewsbury. MediaCityUK, to which 1,400 BBC staff are moving from London, is in Salford, not Birmingham. Is Birmingham’s news media so weak partly because its political debate and institutions are similarly weak, or vice versa? A bit of both I suspect. A Mayor of Birmingham would inevitably strengthen the city’s media. In a democracy, power centres are also media centres – and whatever the love hate relationship between politicians and the media, they are equally vital to the democratic process.
Birmingham Chamber of Commerce members consistently rank inadequate transport infrastructure as one of their top three concerns. This is one reason why a recent survey of businesses ranks Birmingham only 18th out of 36 European cities as “the best cities to locate a business today.‟ Some improvements are afoot. There is extra capacity on the M42, and more is planned on the M6, thanks to the success of hard-shoulder running. I mentioned earlier the welcome rebuilding of New Street. However, don’t get too excited. It is only the circulation area above the platforms which is being rebuilt – the highly constrained track layout beneath is being left as it is, so there will be no extra rail capacity as a result of the rebuilding. The case for HS2, the high-speed rail plan from London to Birmingham and the north which as Secretary of State I published last March, and which I am glad to say that the Coalition is pressing ahead with largely unaltered, is that it is transformational in three key respects: speed, connectivity and capacity. In all three respects Birmingham is the single biggest beneficiary. Birmingham is around or well under 100 miles from all of London, Manchester, Liverpool, Leeds, Sheffield, Nottingham and Derby. HS2 massively reinforces this geographical advantage in the heart of England. Ensuring that HS2 proceeds with minimal delay is vital for the city to gain the benefits in the 2020s and beyond. Here again, a Mayor would be a powerful champion to take on – how can I put this delicately – the principled arguments against HS2 by those who just happen to live in Great Missenden, Amersham and Aylesbury. For the golden rule of high-speed rail is that everyone wants the stations but no- one wants the line. Let me take the benefits of HS2 in turn, starting with speed and connectivity which are intimately connected. London Euston will be 49 minutes from the proposed new Fazeley Street high-speed station, to be built on largely derelict land right next to New Street, down from 82 minutes now. However, journey times to Birmingham from London’s West End and business centres, and to Heathrow, are cut proportionately by far more than this because of a transformational new element of connectivity: the proposed interchange with London’s £16bn east-west Crossrail line at Old Oak Common, ten minutes west of Euston, at which all HS2 trains will stop. Using this Crossrail interchange, Birmingham city centre to Heathrow will be about 55 minutes, down from about two hours now via Euston, the tube and Heathrow Express. Birmingham to the City will be about 50 minutes, down from about an hour and 50 minutes via Euston and two tube rides. Birmingham to Canary Wharf will be an hour, roughly half the two hours it currently takes via Euston and the tube. However, all that is just about connections south. Connections north and east are equally transformed by HS2. Birmingham’s rail and road connections north and east currently range between the poor and the terrible. Birmingham to Nottingham is a mere 56 miles by rail; yet the rail journey time is 1 hour 14 minutes. Birmingham to Manchester is only 82 miles – yet it takes 1 hour 30 minutes. Birmingham to Leeds is 90 miles – yet it takes fully 2 hours. All these journey times are halved or better by HS2. Moreover, it is not just that journey times north and east are shorter by HS2. Here again, there is a transformation improvement in connectivity for Birmingham because of the deliberate route design of HS2. At present, although Birmingham is at the heart of England, it is in rail terms a mere branch line off the West Coast Main Line. Fast trains to Manchester, Liverpool and Glasgow all branch off the WCML at Rugby, without stopping even there. And the WCML is itself only one of three main lines north from London – the other two being the Midland Main Line to the East Midlands and Sheffield, and the East Coast Main Line to Leeds, York, the north-east and Edinburgh. All these lines were built by independent Victorian railway companies preoccupied with their own fast routes from London to whichever cities they were seeking to reach; which is why connections between the cities of the Midlands and the north are so bad – with Birmingham’s geographical position of little advantage when, in effect, none of the main lines going north connect directly with Birmingham at all. HS2 completely redraws this inter-city rail map. Instead of being at the end of an inter-city branch line, Birmingham International becomes the first HS2 stop out of London going north-west to Manchester, Liverpool and Glasgow, and north-east to the East Midlands, Sheffield, Leeds, Newcastle and Edinburgh. Britain’s second city becomes – for the first time – a national rail hub. And not just a high-speed rail hub. Birmingham International becomes a hub incorporating HS2, Birmingham airport, the M42, the NEC and the existing West Coast Main Line. This is a fundamental redrawing of the Victorian railway map of Britain to Birmingham’s advantage. With HS2, Birmingham Airport can be reached quicker than Stansted from Heathrow and much of London. Having said all this about speed and connectivity, HS2 is justified on capacity grounds alone, and it is important to make this argument when pressing Birmingham’s case. Capacity constraints on the West Coast Main Line, already serious, become acute in the 2020s. If HS2 is not ultimately built through to Manchester and Leeds, all four existing main lines going north – not only the West Coast Main Line, but also the Chiltern line, the Midland Main Line and the East Coast Main Line – will need to be upgraded over coming decades, at a cumulative cost far greater than HS2. No crystal ball is required. £10bn has just been spent on a hugely disruptive ten year upgrade of the West Coast line. Analysis for the Department for Transport shows that to upgrade existing lines to provide barely two-thirds of the extra capacity provided by the initial section of HS2 from London to Birmingham will cost more (£20bn against £17bn) than the high-speed alternative. There is a big debate about the economic benefits of high- speed rail. Bizarrely it has been suggested that HS2 might disadvantage the regions by sucking more economic activity into the south-east than it generates in the regions – a view which has even been expressed in the West Midlands, a telling commentary on the lack of confidence there is in the regional economy. In fact, the evidence is of a fairly clear and positive relationship, among cities and large towns, between journey time to London and productivity. The shorter the journey time to London, the higher tends to be productivity. By bringing Birmingham closer to London, its productivity should rise, which is good for jobs, good for business and potentially transformational for Birmingham’s future. I would add, from my international visits to understand the impact of high-speed rail in Europe and Asia, that I have not yet met the leader of a city who has got a high-speed connection who wishes they hadn’t. Speak to civic and business leaders in Lyon, France’s second conurbation, which was first linked to Paris by the TGV thirty years ago this year, and they believe its impact has been transformational. They are campaigning for a second high- speed link, because the first is approaching congestion.
Over recent years there has been steady improvement in Birmingham’s schools, and as Schools Minister I waxed eloquent about all good news in the city in order to encourage more. But this evening I owe it to you to be frank about the challenge ahead. Birmingham parents should not be satisfied with a schools system which fails far too many of their children, and Birmingham employers should be campaigning from the rooftops for radical – not incremental – change to improve skills and qualifications among the city’s school leavers. Birmingham has 75 state secondary schools. In 33 of them, fewer than half of the pupils last year got five or more GCSE passes at grade C or above including English and maths. Subtract the city’s highly selective state grammar schools, and that is half of the city’s secondary schools which are not achieving a decent school leaving standard for half of their pupils; a standard which, unless they have certain types of special needs, all young people ought to be able to attain. Worse, even within the state system there is rigid divide in Birmingham between the grammar schools and the non- selective secondary schools, with too little being done to bridge the divide. The King Edward VI Foundation, which runs most of the city’s state grammar schools, as well as its major private schools, was until recently treated as a virtual pariah by the education officials of the City Council, because of their hostility to grammar and private schools. I tried hard to bridge this divide as Minister, by making it possible for the Foundation to sponsor non-selective academies in the city, which would form part of the KEVI family. I hoped this would forge strong relationships between academy, grammar and private schools across the city. Getting the City Council to agree was an uphill struggle. Yet, to my surprise and disappointment, as this struggle showed signs of succeeding, key figures in the King Edward Foundation resisted and wanted to stand apart, anxious lest their status and resources be diluted. Only some way through this process did I learn that the City Council is itself – through its nominees – a major presence within the KEVI Foundation, yet was doing little to prosecute its own cause. So after a huge effort of persuasion and bridge building, KEVI is sponsoring precisely one academy in Birmingham, yet it is one of the most powerful educational organisations in the country. I tell this story as a vignette. I could tell many others about the inability to get a truly ambitious academy programme going in Birmingham. It would not be hard to write the education manifesto for a proactive Mayor committed to skills and educational transformation in the City. Instead of seven Academies, there should be a programme for 40 or 50. As sponsors, a Mayor of Birmingham would engage the city’s major employers, universities, educational foundations, and successful philanthropists, who abound but have not been mobilised behind the academy cause as they have for example in the London boroughs – Croydon, Hackney and Southwark – I cited earlier. An academies programme of this kind could seize the city’s imagination and conscience in a dramatic fashion, and make educational transformation and a skill revolution the task of all the city’s movers and shakers. I cannot think of a more worthwhile and important cause.
In short, what Birmingham needs now is a second Joseph Chamberlain, and a Mayor might just provide the opportunity to secure one. In his magisterial history of Birmingham, Asa Briggs entitles his chapter on the late 19th century: “The best-governed city in the world.” “While Birmingham maintained its position as the workshop of the world, it made striking advances in the sphere of government,” he writes. Let me quote his following words at length, for they resonate today:
The middle years of the century were years of municipal torpor. In the 1860s and 70s the forces of inertia were overcome … Social improvements completely altered the appearance of the town … above all, the interest of citizens was captured and their horizons extended. In the process Birmingham not only reformed itself, but set a model for the nation and even for other communities overseas, and Chamberlain, the great architect of change, could write after he became a Cabinet minister in 1880 that unless he could secure for the nation the same social improvements he had already secured for Birmingham, ‘it will have been a sorry exchange to give up the Town Council for the Cabinet.’ Towards the end of the 1860s, a few Birmingham men made the discovery that perhaps a strong and able Town Council might do almost as much to improve the condition s of life in the town as Parliament itself. I have called it a discovery, for it had all the freshness and charm of a discovery. One of its first effects was to invest the Council with a new attractiveness and dignity … The speakers, instead of addressing small questions of administration and of economy, dwelt with glowing enthusiasm on what a great and prosperous town like Birmingham might do for its people. They spoke of sweeping away streets in which it was not possible to live a healthy and decent life; of making the town cleaner, sweeter and brighter; of providing gardens and parks and music; of erecting baths and free libraries, an art gallery and a museum; they insisted that great monopolies like the gas and water supply should be provided without stint and at the lowest possible prices … Sometimes an adventurous orator would excite his audience by dwelling on the glories of Florence and the other cities of Italy in the middle ages, and suggest that Birmingham too might become the home of a noble literature and art.
This was the vision of the great Victorian leaders of your city. The challenge for Birmingham today is to make further striking advances in the sphere of government, and for them to promote a similar civic and economic renaissance. A directly elected Mayor looks the most striking way forward. Chamberlain once compared his City Council to the Duke of Wellington’s army, which would “go anywhere and do anything.” Birmingham needs a modern Mayor in his image, to unleash the huge potential of this great city and its people once again. It cannot, I suggest, come soon enough.
The Prime Minster has justified his leading role in orchestrating a UN resolution to protect the citizens of Libya, particularly those in the east of the country, from the tyrannical oppression of their dictator, Col Gaddafi. There seems to be an underlying moral urge on the part of our Prime Minster and his Deputy to stop the blatant outrage that is taking place just south of the Mediterranean. I sympathise. Historically, we must also remember that Gaddafi part funded the war of aggression by the Irish Republican Army in Northern Ireland and in the mainland of Great Britain itself, and in some of our overseas territories, killing 3,000 civilians in the period known as the “Troubles”. Responsibility for the Lockerbie bombing also sits squarely at his feet. He is clearly a vile and demented individual who is capable of inflicting pain and destruction on not only his people, but those of many other nations. I will open a bottle of champagne upon the announcement of his death, and that of any of his henchmen associated with so much pain and destruction. There are many murderous tyrants around the world, and plenty of morally indefensible states, but we are not on a crusade to bomb them all and liberate their people. The communist government in China unleashed untold brutality against their own people, notably in the Tiananmen Square uprisings in 1989. Despite moves toward capitalism, the Chinese people continue to be oppressed. Are we seeking to bomb them? Surely not. They have a population over a billion, and a standing army of over 2 million. Best leave them alone! More recently, in Sri Lanka, 20,000 Tamils were killed in May 2009. And what about the on-going treatment of the people of Zimbabwe? Here we have another tyrant-led country that has prosecuted a war of famine and pestilence against his own people. I am sure you get the picture. I submit that our leadership shows a selective application of morals. Cameron is very much in the neo-Conservative tradition here. I feel it would be better for him to be honest and practical, and simply say “with the support of the international community, we have an opportunity to depose a tyrant with a history of aggression towards the UK, with hopefully low costs to ourselves, amidst the chaos of a domestic rebellion”. You either apply your moral standard universally, or it lacks validity. Why are we not bombing Bahrain? I wouldn’t advocate it, but Cameron should, if he is to be consistent. Meanwhile, our Deputy Prime Minister, Nick Clegg, leader of the Liberal Democratic Party, says he has voiced his support for possible military intervention in Libya, saying that any action would be carried out in order to “uphold international law.” So Clegg appeals to a higher moral sanction called International Law. This is where the nations of the world, some with very dubious track records, decide what we all should do. I wonder if the UN had passed resolutions saying Northern Ireland should be ceded with immediate effect to the Republic of Ireland against the wishes of the vast majority of the population of both parts of the island, he would unquestionably seek to obey this command from on high. That is hypothetical, but there have in fact been many resolutions against Israel. Should we be as vigorous in enforcing these as we are being with the latest resolution against Libya? I do not think Clegg would go that far. Clegg is not a true Liberal. The great 19th century Liberals such as Cobden and Bright would have recommended arbitration and free trade for breaking down barriers and opening up countries. That should be the long term policy of all nations interested in freedom. The interdependence that results from global trade provides strong motivation for peace. There is no need for international law or global government. For the short term, the moral yardstick a liberal must apply is to treat international relations as they treat interpersonal relations: to live and let live, and only use force in response to aggression. Now, Libya certainly has aggressed against us over the years, and a liberal could have supported the bombings of Libya undertaken by the USA with the support of the UK under the Thatcher government in April of 1986. What aggression have they dealt out to us today? The deputy prime minister, whose Liberal Democrat Party opposed the war in Iraq, said: “this is not Iraq. We are not going to war”. Such cowardice, to hide behind semantics! If bombing the hell out of Libyan air defences, and shooting at tanks and other armoured units is not warfare, I do not know what is. In truth, I do not think Clegg has the stomach for this, and he’s trying to post-rationalise it with appeals to a higher moral authority, and to black out from his mind the uncomfortable reality that he is party to an act of aggression against another state. Bless his Liberal heart and soul; it is all too much for him. More than ever, he must be wondering whether he really wants to be in this Coalition? Faced with overwhelming western air power, Gaddafi may well resort to guerilla warfare, and send his men into cities for protracted battles, street by street, house by house. The misery that this would inflict upon those cities has not been experienced in Western Europe since WWII. I see no justification for this war. However as it has started, I hope this act of aggression by the UK and its allies is swift and decisive. Having committed to intervention, I hope our fighting men have freedom of action to finish this conflict quickly as possible. Failing this, I hope we are brave enough to extract ourselves very quickly, if it turns out that the rebellion does not have the strength to overthrow the regime. My thoughts are now with all the people involved in this conflict, and I pray for peace.
It has become fashionable for our politicians to give us lists and pledges about things they will do or will not do to improve our well-being. A friend in Northern Ireland pointed me to this list, which is filled with great wisdom. I wonder if our politicians would do better to look at this, rather than promising another bonfire of red tape and more jam tomorrow.
- You cannot bring about prosperity by discouraging thrift.
- You cannot strengthen the weak by weakening the strong.
- You cannot help little men by tearing down big men.
- You cannot lift the wage earner by pulling down the wage payer.
- You cannot help the poor by destroying the rich.
- You cannot establish sound security on borrowed money.
- You cannot further the brotherhood of man by inciting class hatred.
- You cannot keep out of trouble by spending more than you earn.
- You cannot build character and courage by destroying men’s initiative and independence.
- And you cannot help men permanently by doing for them what they can and should do for themselves.
Can you improve on it?
I am no fan of Keynesian economics. I find most Keynesian economic theories to be just plain wrong. But for the sake of truth and accuracy, I would like to correct a terrible injustice levied upon Keynes and, at the same time, also correct an equally terrible injustice that time and again is inflicted upon gold. How many times have you heard gold described as the “barbarous relic”? It is a favorite phrase of gold-bashers everywhere who are trying to make gold the object of derision. I cringe every time I hear it, which is all too frequently, because gold is neither barbarous nor a relic, as can be explained easily by the following chart. This chart presents a base 100 analysis of crude oil prices in terms of dollars and grams of gold (goldgrams). In other words, to establish the comparison depicted above, it is assumed in this analysis that one barrel of crude oil equals $100 and 100 goldgrams as of December 1945. The month-end price is calculated afterward based on the actual dollar price of crude oil and the prevailing dollar-to-goldgram rate of exchange. The price of crude oil in goldgrams essentially is unchanged throughout the period measured. It is clear, then, that gold communicates the economic value of oil very effectively, and the communication of economic value is the primary feature of money. Because money is the tool upon which economic activity is based, which is a reality that makes money central to society, money is not barbaric. Consequently, gold cannot possibly be barbaric because gold is money.
Download the whole paper (PDF).