UK 2015 Election: Proof I Don’t Know What I’m Talking About

In the blog-post I wrote right before this one, a few days before the UK general election, I decided to predict the outcome, and guess which of the major parties would form a government, and how long it would last.

I’m currently resting up (or at least, I’m supposed to be) after a 24-hour marathon stint on the Heart and Capital radio stations, breaking all the overnight stories of the election. As the ballot-booths are flat-packed away for now, and the black-and-white “Polling Station” signs are taken down off the walls of community centres and school halls across the country, I think it’s only fair that I look at what I wrote a few days ago, and see how it tallies with the reality.

And it’s pretty clear. I couldn’t have been more wrong about the outcome if I tried. I didn’t even entertain the idea that there might be a majority government, given the consistent message from the polls that suggested otherwise.

So I’m W. H. Wrongy McWrongstein, of Wrongsville, Carolina. Population: Wrong.

Proof, if any proof were really needed, that I don’t know what I’m talking about.

But how did all the polls get it all so wrong? We had months of the polls, from a host of different pollsters, day in and day out, all showing that no party would have enough MPs to form a majority. But when the big day came, we had one clear winner.

David Cameron and the Conservative Party wiped the floor with virtually everyone (except in Scotland, of course. There, the pollsters were spot on about the Scottish Nationalist Party and their dominance). UKIP were decimated. The Greens; right back where they started. The Liberal Democrats exiled to obscurity. And Plaid who?

And as I write, David Cameron is live-tweeting announcements about his new cabinet, fully Liberal Democrat-free following his 331 seats in parliament.

An outright Conservative majority. How did we get here?

The only explanation I can think of (and given how wrong I was in my election prediction – did I mention that? Way, way wrong – my explanation may not carry much weight), is that we’ve seen a repeat of the 1992 election.

Then, a beleaguered Tory government – Lead by John Major – was sleepwalking into a comprehensive defeat.

Their opponents – Labour – were all but guaranteed to form the next government. Labour’s leader Neil Kinnock even went as far as to host a victory rally before polling day.

Then the election day came. And the Tories won. Comprehensively.

I believe that yesterday – as in 1992 – the public maybe didn’t quite form an opinion of how to vote until they got into the polling booth. Major’s government were as far removed from ‘cool’ as you could get. Voting for them was almost an embarrassment to some. Why would you tell a pollster that’s what you were going to do? Even if it was what you were going to do?

But even if it was only in the back of their mind, there was a genuine concern about where the country was headed under a Kinnock government. Back to the old days of economic illiteracy and ‘managed decline’. The people blinked, and Major stayed in Number 10. A few years on, and our deficits turned to very impressive surpluses.

The unique way in which the global market crash in 2008 hurt Britain was – for a big part – down to our unaffordable public spending. We had the deficit of a basket-case economy. But we just kept on spending, kept on trying to live off that ‘hair of the dog’ each morning.

Though it wasn’t totally popular to some, modest steps were taken by the Conservative/Lib Dem coalition from 2010 to introduce austerity. It’s a dirty word these days, but all it really means is “living within your means”. Income has to be equal to, or lower than expenditure. That’s not evil free market dogma, or cruel Tory “ideological” cuts. It’s called maths. If you get £5 a week pocket money, and spend £6 a week on stuff, you’ll have to borrow £1. If you do that every week for ten weeks, you’ll owe £10. One day, that has to be paid back. See: maths?

Now I’m not a big fan of the coalition for a variety of reasons. The debt that’s been piled on over the past five years is inexcusable, and they’re no way near classically liberal enough for my tastes. But, the Tories wanted to eliminate the deficit in five years. They were in coalition, so couldn’t be as radical as they’d like to be. Let’s say, they could only be half as radical. So by 2015, they’ve cut the deficit in half.

It’s a fairly clear demonstration that, generally speaking, they were right. The (now unemployed after losing his seat) Shadow Chancellor Ed Balls went on every TV and radio show in the country describing the austerity (living in your means, i.e. maths) measures as being “to far and too fast” for the first two years of coalition. Turns out, if do want to criticise the coalition’s austerity measures, it’d be better to say they didn’t go far enough and weren’t implemented quickly enough.

The coalition decided to lean in the direction of maths/austerity. Labour leader Ed Milliband – who resigned this afternoon – said for every public sector job cut, a private sector job would also go, creating greater levels of unemployment.

The coalition cut half a million public sector jobs. Two million private sector jobs (more than in the 13 years of Labour) emerged. Most of them better paying, contracted jobs.

So one group called it right, one group called it wrong. It was actually so simple we missed it. And in the back of many people’s minds, they understood. Even if it took them until they had the HB pencil in their hands in the ballot booth to really see it.

But don’t listen to me. I’m W. H. Wrongy McWrongstein, of Wrongsville, Carolina, remember?

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The Help To Buy “Time Bomb”

The classic definition of madness is doing the same thing over and over and expecting a different result each time.

British Prime Minister David Cameron seems very chuffed that his new Help To Buy Scheme is seeing such a large number of applicants right away. But I wonder if this isn’t another financial ticking time-bomb that’s set to go off, in a similar (if not smaller) manner that the last housing-related bubble went off?

Why is there this obsession with making people “home-owners”, foresaking decent economics in the process, even when those decent economics can steer you clear of a financial meltdown?

Buy all means, build more homes if there’s a market for them. That might curb prices and make a mortgage more economically viable. But when the government uses the banking/lending system as another tool for social engineering, you get, well, you know, what happened last time.

Some interesting views on this in the Backbencher, which is always well-worth a read.

The “Anglo-Saxon” Approach was not to Blame for this Mess

My local MP John Redwood has, in four basic points, eviscerated the myth that laissez-faire light touch regulation (or the so-called “Anglo-Saxon Approach”) was responsible for the banking crisis:

1. The European banking system is in a worse mess than the UK or US systems today. There is no evidence that the EU, Spaniards, Italians, Greeks and Germans suddenly fell in love with “light touch Anglos Saxon regulation” and made the same mistake, yet they ended up with more weak banks.

2. The volume of regulations expanded substantialy during the build up of the boom. The EU came into the game and added many pages of new financial regulation at their level, on top of all the extra regulations the UK and US authorities were issuing. The UK was governed by a left of centre administration which believed in the efficacy of more regulation. The FSA reviewed all past banking regulation and added to it.

3. The authorities themselves were enthusiastic proponents of the easier credit they allowed under their myriad of new detailed regulations. In the US a Democrat President promoted more mortgages to people on low incomes as a social policy, which led directly to the junk loans which jeopardised the system later. They called the crisis the “sub prime” crisis in honour of the loans advanced by mortgage banks and by a couple of state financing arms that were fully nationalised in the crisis. The UK government ran up big bills paid for by off balance sheet transactions called PFI and PPP in the spirit of the lend more age.

4. The UK administration was particularly keen on promoting the growth of Northern Rock, a North Eastern company, and RBS,a Scottish company, as they grew very quickly. They took pride in the huge expansions of their balance sheets, and in the way they used off balance sheet vehicles to speed their growth. In the good days these were northern and Scottish companies showing London and the south how to run modern banking and financial services.

I wonder if we’ll ever be able to put this myth that laissez-faire is to blame to bed for good? Sadly, I doubt it…

Andy Jones TV: The BBC Has Its Revenge!

I’ve had a load of emails, tweets and even smoke-signals from people sending in their examples of BBC Bias.

In this episode of Andy Jones TV I talk about one person who’s come up again and again, the BBC’s Robert Peston – that pompous chap who they wheel in to be at the forefront of the BBC’s coverage of the global economic recession. I talk a little more about this government ‘yes’ man who seems to understand very little about the science of economics.

And it appears that the BBC has managed to (almost) have its revenge on me by accidentally trying to overtax my income from the Beeb. (In the interest of full disclaimer, I have indeed worked a little for Britain’s state-owned broadcaster. It’s hard to be in the film/TV/radio business in the UK and not work for them. But I’m not exactly the most popular person there!!)

Oh, and my tax mess-up has been sorted, thank you. Seems that it was an Inland Revenue mistake rather than the BBC – but it was ironic that the letter about my over-taxation dropped through the letter box just one day after the first episode of BBC Bias on Andy Jones TV went live!