We live in an ordered universe, which makes it harder for us to accept the chaotic state of our relations with one another.

From Telegraph Blogs, 07/05/2013

For almost a week, Westminster and the commentariat has tied itself into knots attempting to answer the question of what it is that Ukip voters want. It is an open question with many answers, from Europe to grammar schools to the fact that it is led by a lovable rogue rather than a plump social nihilist. Today’s Times (£) article by Rachel Sylvester, one of the most perceptive political commentators out there, gives a summary of the view from the Westminster Village:

What Ukip offers is nostalgia. It holds out the prospect of returning to the Britain of the 1950s (when the country was whiter and less relaxed about homosexuality)… It is a fantasy, of course, in an age of globalisation and Google. But there is no doubt that this message resonates in an island nation, particularly in a recession.

There is a great deal of truth in this, but not in the sense that is being implied. A vote for Ukip last week was not a vote against black people, or homosexuals, or any of the other things which the centre and Left imagine the Right spend their time fretting about. I simply do not believe that many people engaged in the election of town councillors in the rural English shires decided to change their vote on the hunch that Nigel Farage has strong opinions on the appropriate placement of the male member.

What happened last week was deeper than that: Britain voted for order.

We live in a monumentally chaotic world. This is not for want of regulation and laws; indeed the proliferation of both is symptomatic of a world increasingly beyond our comprehension. The world never recovered from the First World War. Since the Armistice was signed, successive generations have grown up to find (in F Scott Fitzgerald’s words) “all gods dead, all wars fought, all faiths in man shaken”.

Our civilisation is, mercifully, one based on ideas not artillery. The ideas on which we have built the foundations of modern life are fleeting, transient, and insincere. I doubt one person in five subscribes to the view that all religions are of equal value (and therefore of none), the genders of identical suitability for any and every task, parenting arrangements of the same merit irrespective of the number of participants: yet we are required to concede that we are wrong, by Act of Parliament.

A middle-aged person has lived in a Britain will have seen over the scope of his life homosexuality banned, then tolerated, then celebrated. Women have been castigated for wanting to work, and then for wanting to raise children instead. In the 1960s 362,000 people got divorced; in the 2000s it was 1.4m. Socialism has gone from meaning the ownership of the means of production by workers, to meaning intense relaxation about the most sustained period of capitalist greed in history, to meaning nothing at all. Conservatism has become a radical philosophy. What we have experienced is a moral revolution, comparable in speed only to the technological change which has been raging since the Industrial Revolution.

Set against this change is the finite and relatively fixed aspect of human nature. The constituent parts of an enjoyable life in 2013 are identical to those required for an enjoyable life in 1013 – warmth, a house of your own, food, drink, love, peace in your relationship with God, physically challenging work, and a mixture of conversation and quiet.

The moral revolution has made much of this prospectus more distant. Hearth and home are harder to come by, given the death of the idea that financial reward should be tied to the production of something useful. Asset price inflation is a consequence of deciding that the money supply is not a moral issue; that too makes it harder to live. Our lives are too noisy, particularly where people live closest together in the cities. The sexual revolution has increased our stock of temporary pleasures at the expense of a more enduring one – for what it’s worth, my impression is that both sexes see too much too young and become hardened by it. Young women do not fear the social stigma of a one-night stand any more, but they do fear the vulnerability of love, and that’s sad.

Where do Ukip come into this? Well, they embody a deep desire for some fixity in life – time for the new order to embed itself, space for people to adapt. The range of examples I have given should make it explicit that moral change can be both necessary and good. It still needs time to take root before the next sweeping change, however. The Tory party used to ensure this happened, but it is now as devoted as Labour to social radicalism. A vote for Ukip was a vote for a party whose policies seek to sustain a moral order which is dying but not yet dead. It was a vote which spoke of exasperation at the pace of change and the drive and desire of the main party leaders to keep tinkering.

It’s interesting how differently the world appears as time slips away. About five years ago I remember encountering the teleological argument for belief in God while at university. It seemed hopeless to me as a formal proof, but as the year’s go by, I have had to rethink that. The need for order dwells deep in the heart of men, and civilisation is nothing if not the desire to impose order on the world. That desire separates us from animals, and we do not adjust well to long periods of sustained and deliberately induced chaos in our social relations. I suspect what most people want from a government is a period of placid inactivity. Heaven knows, we need it.

We should hold our stake in RBS

From Telegraph Blogs, 03/05/2013

It looks like the government’s foray into bank ownership may be coming to an end. Yesterday’s  FT (£) story that the state’s stakes in both Lloyds and RBS could be sold before the 2015 election was apparently franked by the comments of Stephen Hester today. The RBS chief executive announced that the work of making the bank ready for sale was “nearing completion” and would be finished by 2014. The sales will be at a whopping loss. Currently the combined shortfall on the 82pc holding in RBS and the 39pc holding in Lloyds amounts to £24bn.

The politics of the move is clever. There are three main political drivers of the decision to go now. Firstly, divesting before the 2015 election would improve that year’s deficit figures significantly, giving Mr Osborne the chance to point to a deficit which has diminished significantly from its peak, even if it hasn’t been eliminated. Secondly, the emphasis on Mr Darling paying over the odds for the stakes when they were purchased would give an opportunity for the Tories to remind voters of Labour’s fiscal irresponsibility. Finally, the possibility of a Tell Sid-style public offer would give some ballast to Tory rhetoric about wanting to resurrect the idea of a share-owning democracy. It would certainly be a lot more feasible than the madcap scheme to have employees barter away employment rights for a tiny shareholding of uncertain but small value.

There is a caveat, though. Britain’s sales will be contrasted with America’s where the government exited its holdings early and at a profit. But seeing the stakes in RBS and Lloyds as investments is itself wrong, as Dr Peter Hahn of the Cass Business School argues:

More ridiculous are the criticisms related to how well the US made out of saving its banks and related share sales.  Regardless of the forms taken, neither country ‘invested’; these were the costs of shoring up their banking systems – had they been ‘investing’ for returns every advisor on Wall Street or in the City would have suggested Brazilian banks at the time.  HM Treasury should be looking at every penny received as found money – German WestLB needed rescuing and it is being shut down.

Irrespective of the treatment of the proceeds of a sale, it is possible to contend that the Government ought to retain its stake in the banks. The British mania for selling things represents one of the greatest mistakes of the last three decades.  Often it is justified – post-1979 privatisation meant divesting ourselves of many companies in industries which the government had no business engaging in, such as cars (British Leyland), pharmaceuticals (Amersham International) and hotels (British Transport Hotels).

However, the scheme also resulted in the foolish privatisation of natural monopolies which has hampered Britain’s subsequent development.There are areas so vital to the national interest that they are unsuitable for the private sector. In an area such as coach journeys (National Bus Company/National Express), barriers to entry are low, and there is the possibility of a real variation in the offer made to consumers in terms of destination. For this reason, privatisation was sucessful.

On the other hand, areas such as energy and the railways should not have been privatised. For a start, it was almost impossible in both cases that privatisation would work its magic in terms of choice – train companies have not opened new stations, electricity companies all provide the same product from the same power lines. But m0re importantly, these companies require a level of forward thinking and capital investment which companies (rightly) seeking to maximise profit and dividend payments for their shareholders cannot provide, as a brief study of our nuclear policy will show.

It is in this context that I would support Britain retaining its stakes in RBS and Lloyds. The banking sector already has enough depth to offer customer choice. By retaining a stake, the state would ensure that at least in parts of the industry, bankers took a longer view. There are sound moral reasons for pushing nationalised banks to abandon questionable practices like using food futures as purely speculative financial instruments, inflating the price. There are sound economic reasons for using a the national stake to push for the sort of SME lending which Vince Cable is always talking about. If investors want their money tucked away at a hedge fund with a bank attached, there’s always Barclays. The continuation of the present arrangement does not disrupt the market, and it may do some good.

Moreover, with RBS returning to profit, there is the prospect of a long-term contribution to British government finances through dividend payments. In 2006, RBS paid a total dividend of 90.6p per share (this was before the 10-for-one stock split), a total of £2.9bn. With the banking cycle beginning again in the United States, and a British one probably only a couple of years off, now’s the time to hold and enjoy the dividend income which will follow.

The British public rode to the rescue of the banking sector as the financial crisis hit. It has every right to collectively reap the benefits through dividend payments made by nationalised banks. Putting those payments into the hands of institutional investors and those with enough disposable income to subscribe to an issue is not reasonable given that the enduring debt burden is collective. I’m aware that I’m sounding like an old Leftie, but the nationalised banks should remain in public hands.

Farage’s success is the result of good politics, not good candidates.

From Telegraph Blogs, 01/05/2013

There’s an awful lot of personality politics about at the moment. That the Conservative campaign against Ukip is based entirely on attacking the personalities of obscure council candidates tells us a lot about the Tories. It is also strikingly ineffective – Ukip have just hit a high of 22pc in a ComRes poll restricted to the areas voting tomorrow.  It is worth considering why.

Firstly, there is the general point that the public does not expect a great deal from its politicians. There is a tacit acceptance that a career which consists almost entirely in telling other people what they may and may not do attracts a reasonable share of severely abnormal people. The vast majority of politicians are, in my experience, genuinely motivated by public service, but since Back to Basics collapsed under the weight of financial and sexual sleaze in the Major years, their contributions have been marginalised in the public mind. In other words, the public care less about the person and more about the policies because they have despaired of politicians.

Secondly, it is quite possible for ridiculous people to have sensible things to say. Britain’s greatest leaders have largely been figures of unimpeachable comic potential, particularly the wartime duo of Lloyd George and Churchill. The argument is the same as the one Orwell famously made about Dali – you can hold the artist morally repugnant, but that doesn’t mean that the skill of the draughtsmanship is anything other than superb. Similarly Ukip’s front men may frequently be outlandish figures, but many of their beliefs resonate strongly with middle England.

A different way of framing this is to look at Labour. They have the opposite problem to Ukip and it’s killing them. Ed Miliband is a fundamentally decent man. The more you hear him, the less you doubt his intentions. Last summer he discussed his love of Geoff Boycott on Test Match Special. The contrast with Dave’s appearance was astonishing. Here was a very nice, well-intentioned man speaking with passion about something I could relate to. Every time I have heard him subsequently, I have formed the same impression. I like the chap. If most people would take off the party glasses, I think they would, too.

However, nice though he is, Mr Miliband’s policies are, in my view, very misguided. His track record is bad in that he was complicit in both the dreadful energy stitch-up which will see us pay more for hopeless and uncompetitive renewables. He was also part of Team Gordon while the then PM worked his magic on the economy. While I like Ed’s VAT idea, his track record on policy does not inspire confidence. Voters feel that too: however pleasing Ed may be when contrasted to Dave, his politics bar a vote for him.

Every back-row forward knows that playing the man without the ball is one of life’s great joys. They also know that to do so seldom changes the flow of the game, however much it damages one individual. We collectively believe that Ukippers may often be barmy, but we like their policies. The Tories should realise by now that pillorying their candidates will do little to halt their march.

All that glitters…

From Telegraph Blogs, 16/04/2013

The facts in the public domain do not justify the sharp fall in the gold price over the past two trading days. At the time of writing, the price per 100oz is $1363, down over $200 since Friday’s open. The scale of the sell-off was the worst in 30 years, with the volatility index standing at the highest level in its history. John Kemp at Reuters has calculated that based on a normal distribution, you would expect to see movements like Monday’s only once in every 500 million trading days, or two million years. The news which would justify such a price swing is curiously absent – in fact, my view is that the market ought to be bullish for gold. Something doesn’t add up.

In any market, price is determined by the confluence of demand and supply. In many respects  supply of gold is relatively fixed. We know the extent of discovered gold reserves and the rate of production. While Cyprus is being forced to dump “excess” gold in order to meet the ever escalating bank bail-out bill, its whole holdings are worth only $750m, hardly enough to move one of the worlds deepest and most liquid markets to this degree.

In fact, most of the selling pressure has come from ETFs dumping holdings. A record $9.2bn of net outflows from gold ETFs in the first three months of 2013 are indicative of a loss of faith on the part of investors, as well as of a structural change in a market which has been opened up to electronic trading by the invention of these instruments.

But why would investors wish to sell their gold holdings? As an alternative store of value, it is easiest to think of demand for gold in terms of demand and supply of fiat money. When demand for fiat money falls or supply rises, people decide to hold less and move their cash into alternative stores (gold, silver and now Bitcoins being the most common). Likewise, when people are optimistic about the state of the economy, they demand more cash because they believe they will be able to invest it in dynamic assets like stocks which will generate better returns.

A surge in demand for money over gold (and hence a fall in the demand for/price of gold) can, therefore, be very broadly justified by either a contraction in the supply of money or a more general optimism about the economy.  Are there grounds to believe either of these has happened?

Well, the world’s stock of fiat money is not contracting. Quite the opposite, in fact. Japan has just launched stimulus on steroids which will see the developed world’s most indebted economy create a proposed $1.4 trillion in Yen in a bid to break free from depression. Nor is money creation in the West likely to subside. Earlier this month the Fed hinted it would continue buying bonds for the foreseeable future, while there is an expectation in London that Mark Carney’s arrival at the Bank of England will see more activist monetary policy here, too.

Likewise, the recent decision of the eurozone to confiscate money directly from Cypriot bank accounts clearly creates a template for other crisis-struck nations in Europe and beyond. There is now a major political risk factor in holding large cash deposits. In the meantime, US growth is slowing, Britain’s is still anaemic and China’s rate of expansion came in below market consensus for Q1. It isn’t a booming real economy which is persuading people to cash in their chips.

So what is driving the gold dump if not changes in the macro-economy? I have written in the past that, in my view, the gold markets have been rigged. In this context, the sale of 500 tonnes of paper gold on Friday takes on a different hue. As John Mauldin, one of the most impressive macro analysts out there, wrote in his newsletter this morning:

Five hundred tons of paper gold contracts were sold dumped into the market on Friday. That is a lot of gold. In short, some people sold gold like they had a gun to their heads, in such a quantity and with such ferocity that the likelihood of their being a for-profit seller is right up there with my chances of winning this week’s Masters.

I agree. I have written in the past of the links between the British gold sale at the turn of the millennium and the need to prevent the insolvency of a trading house whose short position had left them unable to meet their commitments at expiry. With this in mind, Andrew Maguire’s comments that a similar situation led to a concerted effort to drive down the gold price this time around are interesting, although unverifiable.

The gold market remains one of the most complex and opaque in the world. None of the publicly available data justifies the incredible price movements we have seen recently. It looks as though the market has been rigged again.

From Telegraph Blogs, 15/04/2013

England is headed for more civil unrest unless a cause can be found to rally the nation

Were it not for smartphones, England would be close to a state of civil disorder. It is a kingdom divided against itself, but it has so far lacked a single point of controversy around which public discontent can calcify. At the same time, a generation, drained of intellectual vitality and moral vigour, tweets and fidgets its way through a life mediated entirely by the internet. The curious belief that clicking a button can change the world has, for now, largely replaced the civil unrest of earlier generations.

This state of affairs cannot go on indefinitely, though. It concerns me that the outpourings of anger and hate on the Left in the wake of Lady Thatcher’s death have been passed off as the activity of a few dozen oafs. Morons these people may be, but their actions are part of a wider phenomenon. England, always an angry nation, is seething below the surface.

For all that we protest, how many on the Right have not expressed sentiments as ugly and bilious in their own homes? What remains of the compact of politeness which governs our public life has prevented much of this bubbling to the surface, but can any reader of the comments below the line on these blogs really doubt that there is a significant body of opinion in this country which actively despises Muslims, for instance, with a passion and lack of reason which is reminiscent of pre-war Germany?

But where does this anger come from? It arises because we have lost all purpose as a nation. “We are all in this together,” we are told. But in what? The practice of austerity. Why must we be austere, people ask? To honour our debts. Debts to whom? To the financial markets, a motley collection including the same groups which caused borrowing to be so great in the first instance. This is our national programme. Rally around that.

We have no cause left to fight for globally. Instead of acting as a guarantor of the balance of power in Europe, we have acquiesced in the peaceful subjugation of national rights by a supranational body marching to the beat of the German drum. The Christian evangelism of Empire has given way to the inglorious world of conference activism.

Domestically, the battles of reform are now largely in the past. The uneven progress to full democracy which ran from the early Plantagenets to the New Liberals is one of the great stories of humanity. Yet, after 85 years of universal suffrage, the nation is as economically stratified as in Edwardian times. True, living standards have increased across the board, but there has been no end to the economic dominance of an oligopoly.

There is now no hope of one either. The energies the English once devoted to improvement through statute they now devote to seeking the deprivation of others. Right and Left argue about what should be confiscated from whom.

The result is that England has turned in on itself. Finding no fault with our system, no claim to stake in the wider world, each class attends itself to the destruction of the privileges of others. Without common cause, our collective energies find an outlet in a drive for destruction.

England, as we knew it, ceased to be sometime in the closing years of the last millennium  No country can be the same when its principal city and most of its positions of note are occupied chiefly by people who are ignorant of its history, resentful of its traditions and who scorn its national religion. These people are not immigrants, but the English themselves. Trying to build a new Jerusalem requires a unity of purpose we now lack. I worry that we are building a bonfire instead.

Michael Howard: the wrong man for the job in 2005.

From Telegraph Blogs, 27/03/2013

To everything there is a season, and a time to every purpose under the heaven.

The writer of Ecclesiastes knew something Michael Gove’s wife doesn’t. Sarah Vine’s broadside against Boris in this morning’s Times (£) contains the following assertion, something of a mantra to Cameroons:

Johnson’s real enemy is not himself but the way others perceive him…Tories who erroneously believe that a) all the party needs to do to get a majority at the next election is be more like Ukip (they tried that in 2005 and look how well that went)…

This case is often made by a Tory modernisers. The idea of a Conservative party with conservative values, one which wished to protect social institutions rather than destroy them, one which does not approach public spending with all the continence of a sleeping drunk, has been tried and has failed, we are told.

Instead, we are left with a party badge and a policy vacuum (to which we could retort, were we being childish, “they tried that in 2010 and look how well that went”).

This nonsense relies on a number of assumptions which are simply untrue. To wit:

1. The idea that public desires and priorities are fixed and unchanging. In 2005, only 9pc of voters cited the economy as their main priority, 14pc cited the NHS and 2pc Europe. Now the economy is by far and away the most important issue, in arecent poll for Lord Ashcroft, three quarters of voters made it one of their three biggest issues, almost three times as many as answered that the NHS was. Preventing welfare abuse is now a major priority. In the boom years, it flew below the radar. These are difficult times and people are less squander merry. Now is the season for conservative policies, 2005 wasn’t.
2. The problem in 2005 was with the substance of the Tory offer. It wasn’t – the problem was style, particularly the style of their leader. As Damian McBride said in a recent blog post, Labour’s internal polling indicated that there were Tories who might have been able to beat Blair in 2005, but not Howard. One of the peculiarities of politics is that, as George W. Bush noted in Decision Points, electorates seldom go back a generation. Having broken with the Major years in choosing Blair, the electorate were unlikely to go for a member of that same generation in preference to the younger Blair two elections later.
3. The idea that voters respect malleable beliefs, not fixed priorities. Voters respect sincerity. The only thing Tony Blair ever believed in consistently and sincerely over his entire political career was himself. Voters bought into that belief. Most of Britain’s most popular politicians hold views which are quite mad, but with unimpeachable sincerity, from Tony Benn (state socialism) to Boris Johnson (the messianic mission of Boris Johnson). The appeal of Nigel Farage is based largely on the tremendous novelty of having a leading politician who believes what he says. Crafting a message based on what worked and what didn’t work at the last-election-but-one is not likely to win respect or votes (cf the failure of Wolf-pack Dave, Hoodie-hugging Dave, EU-bashing Dave, Immigration-controlling Dave, No-turning-back Dave to progress the party’s polling).

Glib sentiments are two-a-penny at Westminster. But unless they are examined with at least some degree of scepticism they quickly become orthodoxy. The idea that an approach which didn’t work in 2005 cannot work today is nonsense.

Britain may also soon close for business without strong leadership.

From Telegraph Blogs, 22/03/2013

Events are moving a mile a minute in Cyprus (follow our brilliant live blog here). The handling of the situation by the institutions of the European Union has been an abject lesson in what not to do. But it’s all very well saying that the solution being applied is the wrong one. What if they are all the wrong ones? That is the situation which Cyprus finds itself in now. It is also the situation in which Britain will find itself shortly.

Cyprus first. As it stands this morning, there is a Plan B on the table after parliament voted down the proposal that every bank deposit in the country be subject to a deduction. The new plan only affects those with deposits over €100,000; however, it will require those depositors to take a loss of up to 40pc. As part of this package, the nation’s two large banks will be saved. However, the structure of the deal requires that one of the pair, Laiki, will be split into “good” and “bad” banks, with large depositors left to chance it in the bad bank.

A word on the thinking behind it. While you and I perceive deposits as secure money (and I have argued that to touch them is an abuse of power), technocrats in Brussels take a different view. They tend to view deposits in the technical sense of being loans to banks. You give the bank your money in exchange for interest, and can call the loan at any time (provided not everyone else is doing the same thing, which is the situation now). The bank loans most of your deposit on again. When countries struggle with too much debt, those who have loaned them money get “haircuts”, or less back than they gave. Following this thinking, the EU’s argument is that if we lend money to failing banks, we too must take a haircut to keep them solvent.

The Cypriot government understands that people do not perceive deposits in that way. Hence their frustration with Europe. The Mail reports that Cypriot leaders were refusing to take phone calls from the ECB yesterday, focusing instead on negotiations with the Russian government. Those talks seem to have collapsed overnight. The ECB has said that it will stop funding Cyprus on Monday. They have until then to get a deal in place.

So the compromise deal is an ugly one, involving a precedent (confiscation of deposits) which will cast a pallor over the entire European banking system. But the problems are equally great with any other solution. If the banks are left to fail, depositors lose everything except the scraps recovered by administrators.  To argue that they, and the country, must be funded directly by the EU, requires the continued willingness of Germany to act against its own economic interests and support an entire continent on its shoulders, impossible without fiscal and political consolidation which no electorate would assent to at present (not that they are asked, usually).

Cyprus has reached the point of no return. There’s nowhere to run. A lot of pain is coming which cannot be deferred. All that is left is to decide who will bear the greatest portion.

Britain is not yet at this stage. What is terrible is watching us drift there. As Peter Oborne wrote the morning after the Budget, the failure of this government to implement proper austerity (while tarnishing its name by paying lip service) has legitimised the idea that there is no alternative to deficits in perpetuity and debt spiraling off into the distance.

Through sheer lack of political will, we will find ourselves in five or six years beyond the point of no return. The call in today’s Telegraph leader column for real leaders with courage, conviction and the honesty to admit how far down the path to destruction we have come, could not have been better timed. I pray someone is up to the challenge.

George Osborne should cut income tax, not corporation tax

From Telegraph Blogs, 19/03/2013

A growing number of people believe that the Chancellor ought to use his Budget to introduce a cut to corporation tax. A group of MPs has written demanding one, Kwasi Kwarteng has spoken of his desire for one, and there is an expectation at Westminster of a cut tomorrow. This is against the backdrop of a cut to corporation tax rates worth £3bn a year by 2014 announced in the Autumn Statement. The eventual 21pc rate (down from 28pc) will be the lowest in Europe aside from Ireland and Luxembourg.

I am all in favour of tax cuts, but this is the wrong one. The rationale behind this move is that lowering corporation tax will encourage firms to transfer to Britain. In reality, this means services firms, who are mobile, not industrials or manufactures who are more tied to a specific location. Not only will the exchequer benefit from tax revenue, the economy as a whole will benefit from the goods and services it is able to sell to the new entrant. I am not sure that this makes sense. If you were a business based in Dublin, would you make a leap across the Irish Sea on the basis that the UK’s corporation tax was now only nine pence in the pound more expensive?

As for sending the message that “Britain is open for business”, consider the political risk attached to Britain as a destination for inward investment at present. We may or may not have a referendum on EU membership sometime towards the end of the decade, the Chancellor’s deadline date for paying back the fist pound of debt has gone from 2015 to 2018, inflation expectations are all over the place because the BoE may or may not be given “radical” powers and a new remit when Carney arrives. Businesses thrive on certainty – Britain cannot offer that, penny off or not.

The reason firms come to Britain (well, London) is as a result of the legacy concentration of capital, a small elite of highly educated people who tend to cluster around London, agreeable houses and restaurants for the bosses, as well as the sense that London is a business city and what happens here matters in a way that it doesn’t in Dublin or Stockholm or Prague. Fiddling with corporation tax will do nothing to change the picture, as such it shouldn’t be a priority.

Cuts should be made to income tax. Consider the difference between the economic troubles we are currently experiencing as opposed to the ones in the seventies. The seventies were characterised by much higher rates of inflation, a great deal of which came from rises in wage rates. Productivity gains and profits were converted into higher wages at the expense of the employer thanks to strong unionisation.

By contrast, the profits and productivity gains of the last decade have been translated into corporate profits. The disconnection between the fortunes of the world’s stock exchanges this year and the real economy is indicative of this. With weak unions and an economy well stocked with cheap, imported labour and vast hordes of university graduates, in which those offering the jobs have the whip hand, the lower level inflation we now have is more damaging to quality of life for workers.

Stagnant wages and rising inflation (frequently the result of monetary policy) have led to a 9pc decline in living standards for the squeezed middle since 2007. Households need a break. Rather than swelling corporate balance sheets further, the Chancellor should look to cut the basic rate of income tax.

Wallington County Grammar School – scene of a thousand detentions

From Telegraph Blogs, 14/03/2013

What would be the first new grammar school in half a century is under threat. As we report, Kent County Council had proposed to use the site of the former Knole academy in Sevenoaks for a new, academically selective school. They have now been overruled by central government in the form of Lord Nash, who wishes to use the site for a free school.

This is a shame. One of the great difficulties in modern Britain is the lack of social mobility. This is largely thanks to the corrosive mixture of booming asset prices, high taxes, fixed wages and high inflation, which make it difficult for a person on even quite a high gross wage to get out of the rental market. The predominance of public schoolboys at Westminster is linked to this point – consider that a starter job in Parliament pays in the range of £18,000 a year. How do you support yourself in London, network and live any quality of life on that wage without parental help? You can’t; so the privilege of old money becomes ever more entrenched. In such an environment, I would argue that grammar schools (huge demand, easily understood) ought to be prioritised over Michael Gove’s free schools (limited demand, opaque aims).

More so even than general politics, education is a tribal venture. I am the product of a grammar school (Wallington) in the part of south London where I still live. Attending a grammar school transformed my life. All of the subsequent opportunities which I have had, in work, travel and education, are a result of it. Coming from a poor family, none of whom had been to university, I can testify to grammar schools’ worth as a driver of social mobility.

I mention my personal background because a lot of the opposition to grammar schools is personal. John Prescott has been a lifelong opponent of selective schooling; whether that’s because he failed his 11+, or because a youthful love letter to a grammar school girl was returned with spelling corrections, we can’t know. (It must be pointed out that he went on to be Deputy Prime Minister of Great Britain, a member of the Privy Council and very well off; he can hardly say his life has been ruined.)

On the other side, there’s the public-school brigade. As a rule, they don’t like grammar schools either. I have always imagined that this is because it must be very uncomfortable finding yourself at the same level as a grammar school pupil professionally – you know they’re here on talent, but are you, or did you buy your way in? That sense of creeping inadequacy must tear a man apart.

On a more rational level, the main argument made against selective education is the one made by Chris Cook at the FT (£) and by Dan Knowles, late of this parish, that grammar schools do not add value by virtue of their structure, they simply lump a group of bright people together and maintain the comparative advantage which they entered with. In this view, comprehensive children are consigned to a dim future because their brighter peers, whom they might learn from, are no longer swimming in the same stream.

I hate this attitude, although I accept that it is now inherent in everything from education to our tax and welfare systems. Personal responsibility is important. It may make sense from a maximum aggregate utility perspective to make the best slightly worse in order to make the worst slightly better, but we don’t exist as tiny cogs in a great utility-maximising machine. We live as individuals with our personal hopes, dreams and aspirations. In my view it is wrong to artificially lower one person’s horizons even if, by doing so, you may possibly artificially raise another person’s.

Britain’s governing class bears more relation, in background terms, to the Macmillan cabinets than the Major ones. Our society is becoming more oligarchical, not less. Given the financial crunch which we will experience over the next decade, we need grammar schools if society is not to freeze completely.

Pope Francis

From Telegraph Blogs, 13/03/2013

In 1884, exactly 33 years before the Miracle of the Sun, Pope Leo XIII had a vision while on his way back from Mass. He froze for ten minutes, face contorted in worry, before hurrying into his office where he composed the prayer to St Michael the Archangel which was to be said after Mass throughout the world. What had affected him? He had heard two voices – one sweet and kindly, the other demonic and jagged. The conversation they had went like this:

Gruff: “I can destroy your Church.”

Gentle: “You can? Then go ahead and do so.”

Gruff: “To do so, I need more time and more power.”

Gentle: “How much time? How much power?”

Gruff: “75 to 100 years, and a greater power over those who will give themselves over to my service.”

Gentle: “You have the time, you will have the power. Do with them what you will.”

Seventy five years later, the Second Vatican Council was convened. One of its first acts was to abolish the saying of St Michael’s Prayer.

The relevance to the election of Pope Francis? Well, it is not the province of spiritual paupers to advise the princes of the Church. But we can express our hopes. It does seem to me that the world has become a significantly wickeder place since it ceased to believe in evil.

This is particularly the case within the Church. Great evils have been perpetrated by men who ought to have been serving God, not abusing trust. I hope and pray that Pope Francis completes the job begun by Pope Benedict XVI and drives these people from under the Church’s roof.

Latin American Catholicism is something I have been fortunate to witness at first hand. There is a joy in worship, an absence of cynicism which is both moving and a reminder of what we have lost in allowing European Catholicism to become so entangled in the wretched physical sins of those who live for this world. I pray that Pope Francis can impart this joy to the wider communion. Having witnessed his opening address, I believe firmly that this magnetic man can do just that.

The Church, as an institution run by men, can never be spotless, but paradoxically, it must always strive to be. This is the human condition, too. This pontificate must grapple with those facts, and if it does so then the Church will once again become a great fisher of men in the cynical and lost lands of the Old World. God knows, we need it.