Sunday, February 22, 2009

Les experts sont fatigués

par Jérôme Fenoglio
LE MONDE 2 | 20.02.09 | 16h26 • Mis à jour le 20.02.09 | 16h26


e croyez pas la télévision. Il n'y a plus que là que le vocable d'"experts" peut encore être hissé en titre d'une série à succès. Il n'y a bien que là que vous verrez des policiers ou des médecins, infaillibles, dénouant à coup sûr les intrigues les plus embrouillées. Dans la réalité, les experts sont paumés, hésitants, inaudibles. Ils tâtonnent, n'arrivent plus à s'entendre, se contredisent.

Il n'est guère de grand procès où un expert judiciaire ne passe un mauvais quart d'heure. Il n'y a pas de dossier sanitaire ou environnemental, comme les OGM, les téléphones portables et leurs antennes-relais, où leur parole ne soit suspectée, remise en cause, quand ils arrivent seulement à en formuler une. Comme si la société, devenue allergique au risque, s'était mise à leur demander trop. Comme s'ils s'étaient mis à vaciller sous les poids des avis à rendre, des responsabilités à prendre, des culpabilités à venir.

Dans ce monde devenu trop complexe et trop impatient, une calamité s'est abattue sur l'expert : le principe de précaution. Lui ne sait pas bien se débrouiller avec cette patate chaude que l'opinion et les politiques ont placée dans ses mains. Comment jurer que quelque chose ne finira pas par être nocif si on ne l'a pas observé assez longtemps ? Comment être définitif, rapidement, quand les doses à étudier sont infinitésimales ? Quand il s'endort, après avoir admiré les exploits télévisés des surhommes de Las Vegas ou de Miami, l'expert doit rêver d'un univers idéal où le principe qui le tourmente ne serait jamais apparu.

Eh bien, ce monde sans contrainte a existé ! Il y a eu des catégories d'experts qui se sont contrefichues pendant des années de faire preuve de la plus élémentaire prudence. Leur devise ? "Ni principes ni précautions". Ce sont les experts de l'économie et de la finance. Evidemment, la sphère sans entrave ni scrupule qu'ils ont contribué à faire enfler ne pouvait être qu'éphémère. Elle a aujourd'hui explosé, et la contemplation du désastre pourrait arracher un sourire aux spécialistes du monde normal, coincés entre faits scientifiques et vigilance de l'opinion.

Même l'expert majuscule, l'expert-comptable, a failli. Il était censé certifier les comptes, et il n'a rien garanti du tout. Parfois, il n'a même pas cherché à voir qu'il y avait un Madoff qui frétillait au bout de la ligne de compte, et que celui-là exhalait des odeurs de poisson pourri. Les cabinets d'audit et les agences de notation financière n'ont pas fait mieux. Les experts de ces dernières ont invariablement accordé aux entreprises ou aux pays des séries de A aussi longues que celles qui font la réputation des andouillettes. Ce système dévoyé a masqué les risques au lieu de les mesurer.

Et il ne fallait pas compter sur les oracles autoproclamés pour voir la catastrophe approcher. Science accommodante, l'économie tolère en effet des spécialistes que les autres disciplines récusent, des experts en paroles et en écrits, en chroniques et en tribunes. Ces dernières années, plus leur ton était péremptoire, plus ils faisaient autorité. Plus ils se donnaient des airs méprisants, plus ils pensaient avoir raison. Bien sûr aujourd'hui, il leur faut réviser les dogmes assénés à l'époque. Mais ils ne le font que du bout des lèvres, certains assurant que personne n'aurait pu imaginer ce qui est arrivé, d'autres affirmant qu'à la faillite de Lehman Brothers près, ils avaient toujours vu juste. Leur plus grande expertise tient dans ce talent de ne pas reconnaître ses torts trop longtemps.

Homeless American in Paris

Ann Webb, Américaine et SDF à Paris

LE MONDE 2 | 20.02.09 |

Ce pourrait être un cauchemar de touriste américain à Paris. Mais au petit matin, il savourerait à l'hôtel, en même temps que ses croissants, la réalité retrouvée. Ann Webb, elle, ne se réveille pas. Depuis plus de trois mois, cette aide-soignante de 43 ans venue de Portland (Oregon) visiter la ville de ses rêves partage le quotidien peu enviable des SDF parisiens.

Elle en a adopté l'aspect. Regard infiniment las, dos voûté, elle porte aux pieds de gros godillots informes, à la main un sac plastique d'hypermarché. Par-dessus son manteau, elle a recouvert ses épaules de deux pulls bon marché. L'histoire sidérante que nous raconte Ann Webb devant son premier vrai repas depuis des lustres commence pourtant on ne peut plus banalement. Par une envie de vacances.

Quoi de plus classique pour une Américaine de milieu modeste, qui travaille dur, depuis toujours ? A 14 ans, elle donne déjà des coups de main à sa grand-mère, infirmière à domicile. Plus tard, elle décroche un diplôme d'aide-soignante. Et commence à enchaîner les journées de douze heures, à jongler avec deux emplois. Elle se marie, perd un enfant d'une leucémie, divorce, doit se débrouiller avec un seul salaire, vit dans une chambre qu'elle loue. Elle ne supporte plus, surtout, toute cette violence qui l'environne, "tous ces gens qui portent des couteaux, ou des pistolets, et s'en servent. Notamment ceux qui reviennent d'Irak"…

LE VOL ANNULÉ

Durant des mois, dollar après dollar, Ann Webb économise pour s'offrir, en automne, quand les tarifs se font plus doux, une échappée belle vers l'Europe. Un billet d'avion pour l'Espagne, une semaine dans une résidence de tourisme à Marbella. Se fiant aux tarifs repérés sur Internet, elle met de côté 900 dollars pour le billet retour. Lui resteront 1 000 dollars pour vivre, faire un saut à Madrid et Barcelone, puis gagner Paris en train et y rester quelques jours. A La Nouvelle-Orléans, qu'elle a un temps habitée, et appréciée, on lui a toujours dit qu'il y avait une vraie filiation entre la ville des Lumières et l'ancienne capitale de la Louisiane française. Que quiconque aimait l'une aimerait l'autre.

Venant d'Espagne, donc, Ann Webb débarque à Paris, gare d'Austerlitz, le 10 novembre 2008. Est-ce l'élection de Barak Obama ? Elle trouve les Français bien plus cordiaux que les Espagnols. "Le Louvre, la tour Eiffel, de toute beauté, et les gens amicaux… C'était exactement comme je l'avais imaginé." La suite était moins prévisible. Ann commence à être à cours d'argent, en dehors du petit pécule prévu pour le billet retour. Le 11 novembre, dans un cybercafé, elle déniche sur le site d'une de ces grosses agences en ligne qui dégriffent les billets d'avion un Paris-Portland à 549 dollars. Départ prévu le 17. Mais le 14, elle reçoit un mail du voyagiste. Les pilotes d'Air France – qui s'inquiètent de la nouvelle possibilité de travailler jusqu'à 65 ans – sont en grève. Son vol est annulé.

Ann Webb n'a pas souscrit l'assurance à 50 dollars qui lui permettait de se prémunir contre ce genre d'aléas. Le prix des autres billets proposés a doublé. Elle n'a plus assez d'argent pour rentrer chez elle. "Mon cœur s'est arrêté", raconte-t-elle. Son regard, jusque-là d'une grande intensité, s'embue. Elle semble revivre la douleur de ce moment. "Je savais que j'étais coincée à Paris. Presque sans un sou. Dans un pays dont je ne parlais pas la langue. J'étais terrorisée."

Mais l'Américaine espère encore. Une grève, cela ne peut pas durer bien longtemps ! Le prix des billets va baisser. Il n'en est rien. Le temps passe, les nuits d'hôtel coûtent. Sa carte visa prépayée se vide. Ann, soudain, se tait. Avoue sa crainte de "passer pour l'Américaine un peu gourde qui n'est jamais sortie de chez elle". Ce qui n'est pas totalement faux, admet-elle dans la foulée. "C'est vrai que j'étais sans doute un peu naïve. Je n'avais certainement pas assez économisé avant de partir…"

Elle s'offre avec ses derniers deniers deux nuits d'hôtel bon marché, et tente de se calmer, de réfléchir. Elle n'a pas d'économies au pays. Ses parents sont décédés. Elle n'a plus de contact avec son ex-conjoint. Ses rares amies sont fauchées (l'une d'entre elles, une ancienne colocataire, lui envoie tout de même 70 euros). Sa voiture est une épave dont elle ne tirera rien à la vente. Dans l'agence d'infirmières et d'aides-soignantes qui l'emploie, on ne supporte pas d'entendre parler de problèmes personnels. Inutile de les solliciter…

Reste le consulat américain. Contrôles drastiques de sécurité, ticket, file d'attente, enfin une fonctionnaire derrière sa vitre. Fort peu aimable. Ann, à moitié en pleurs, tente de lui expliquer sa situation. Elle veut rentrer, elle n'a plus d'argent. Dans l'affolement, elle croit comprendre : "Maintenant que vous êtes en France, il faut aller à l'ambassade de France. Personne suivante." A la sortie du consulat, elle interroge le premier passant. Où se trouve l'ambassade de France la plus proche ? Il éclate de rire.

"J'étais en état de choc. Traumatisée. L'ambassade ne pouvait rien pour moi ! Toute la nuit suivante, j'ai marché." Elle erre dans ce même Paris des touristes – tour Eiffel, Louvre, rue de Rivoli – qu'elle a découvert en des temps qui semblent déjà lointains. Elle se nourrit d'un sandwich abandonné, d'une orange qui traîne. "J'ai vite compris qu'il fallait marcher. Sinon, moi qui suis une femme, qui ai les cheveux blonds, je risquais d'être attaquée. Dès que je m'arrêtais, il y avait des hommes, des SDF eux aussi, qui venaient vers moi… Je me sentais vulnérable."

EN PLEIN FROID

Epuisée, elle échoue sur un banc près de la Seine, au pied de la tour Eiffel. De gros rats sortent d'un buisson. "A une époque, j'ai travaillé dans un laboratoire pharmaceutique. Je prenais soin des rats. A la fin des expériences, j'étais incapable de les tuer. Je demandais à les ramener à la maison." Ils lui montrent la voie, pense-t-elle. Une cachette qui la soustrait au regard des hommes. Plusieurs nuits d'affilée, elle dormira dans ces buissons.

Deux semaines à la rue, en plein froid. L'aide-soignante commence à repérer les distributions gratuites de soupe. Partout, elle tente d'expliquer qu'elle veut repartir aux Etats-Unis. Mais avec ses trois mots de français, et son fort accent américain, on ne la comprend guère. Elle partage la tente d'une Tchèque. Est hébergée par une "dame asiatique" qui a connu, elle aussi, la misère, mais lui demande de partir lorsque son mari rentre de voyage.

Des compères d'infortune plus "gentlemen" que d'autres, "beaucoup de messieurs arabes", lui confient quelques trucs pour survivre dans la rue. Superposer les couches de vêtements et de chaussettes, porter gants et bonnet, avoir des chaussettes de rechange dans un petit sac régulièrement renouvelé, ne pas être repéré comme SDF. Ils lui indiquent les stations de métro ouvertes la nuit, les bouches d'aération, dans le sol, d'où sort l'air chaud… Les endroits "où se procurer un duvet, où obtenir des vêtements, où prendre une douche, où lire ses mails…", énumère l'Américaine, bluffée de tant d'aide possible. "J'ai même pu avoir une coupe de cheveux et une couleur gratuite ! Aux Etats-Unis, ça faisait dix ans que ça ne m'était pas arrivé. J'ai dû devenir sans-abri à Paris pour ça !", sourit-elle devant nous pour la première fois.

Les SDF, Ann Webb les découvre fort nombreux à Paris. Beaucoup plus qu'elle ne l'aurait imaginé. "Avec le secours qu'ils reçoivent, on ne peut pas deviner qu'ils sont sans domicile, ils passent inaperçus. Moi-même, un jour où j'étais assise sur un banc dans un parc, un Américain m'a demandé comment on repérait les pharmacies en France. Je lui ai parlé des croix vertes. Il a pensé que j'étais une touriste. Je n'ai pas eu le courage de lui dire la vérité."

Ses souvenirs de la rue ne sont pas roses pour autant. Loin de là. Gare de l'Est, un groupe d'Afghans lui propose de dormir dans un endroit chaud… si elle accepte de coucher avec deux d'entre eux. "Cela dit, aux Etats-Unis, on m'aurait entraînée de force avec un couteau. Là, j'ai dit non, et ils m'ont laissée partir."

SOUPE DE RUE

Dans une association qui la domicilie, on lui demande ce qu'elle pense de Bush. Rien de bon. Sans doute habitué à d'autres profils de SDF, un bénévole lui suggère alors de faire une demande d'asile. Ann nous montre le formulaire de la Préfecture de police de Paris, qu'elle s'apprêtait à remplir, avant d'en comprendre la teneur exacte et de réaliser que cela ferait d'elle une traître à la nation américaine.

Il y a surtout ce jour dantesque où des hommes tentent de lui arracher son pantalon. Elle s'échappe. Mais doit traverser tout Paris en sous-vêtements sous son manteau pour en obtenir un autre auprès d'une association. Ce soir-là, épuisée, à bout de nerfs, elle fait la queue pour une soupe de rue. Quand son tour arrive, il n'y en a plus. Elle s'effondre en larmes. On la console, on lui trouve des restes. "Je me suis dit que si je m'en sortais, je viendrais les aider. Aux Etats-Unis, j'étais bénévole à la Croix-Rouge, j'aidais les gens à construire leur abri temporaire lors des inondations."

Un sans-abri ("un Cubain qui voulait m'épouser, attiré par mon passeport") la guide jusque chez Emmaüs. Elle découvre les hébergements de nuit, se sent enfin "à peu près en sécurité". Mais impossible de réserver une chambre pour le lendemain, il faut repasser par le 115, le numéro d'urgence pour les SDF. Au téléphone, elle a bien du mal à raconter son parcours abracadabrant, à convaincre qu'elle vit dans le dénuement le plus total. "Vous êtes une touriste américaine, s'entend-elle répondre invariablement. Nous n'aidons pas les touristes américains. Vous devriez retourner aux Etats-Unis." Un certain Mohammed, lui aussi à la rue, lui explique qu'elle y a droit comme tout un chacun, qu'elle doit insister, demander un responsable. Quarante minutes de palabres à chaque fois. "Epuisant."

Début janvier, Ann Webb peut enfin cesser de marcher toute la journée dans la rue. Une place s'est libérée dans un centre Emmaüs d'hébergement et de réinsertion sociale, ouvert 24 heures sur 24. Celia Morgant, travailleuse sociale, se souvient d'avoir vu arriver une personne "dans une grande fatigue physique et morale, comme c'est le cas de tous ceux qui viennent de la rue". La première Américaine jamais accueillie. Qui, là encore, peine à se faire comprendre.

Ann Webb nous montre la chambre austère qu'elle partage avec une autre femme de la rue. Un lavabo, deux lits d'une place, deux minuscules penderies. En pleine journée, sa compagne de chambrée dort, toute habillée, sur son lit. Elle ronfle comme un sonneur, "mais elle est gentille", soupire l'Américaine. Les vêtements de cette dame forment, au pied de son lit, un gros tas sur lequel trône un chariot. Ann Webb, elle, peut toujours faire entrer ses affaires dans la petite valise qu'elle avait au départ.

DIALOGUE DE SOURDS

Lorsque Le Monde 2 contacte l'ambassade américaine à Paris, c'est la stupéfaction. Elizabeth Gourlay, consule, nous reçoit très rapidement. "Nous n'étions pas au courant de son histoire. Nous ne laisserions jamais une citoyenne américaine, incapable de rentrer chez elle, à la rue en France, surtout dans la période de Thanksgiving puis de Noël !" L'histoire extraordinaire d'Ann Webb démarre par une incongruité, dont on s'étonne à l'ambassade : exemptée de visa puisqu'elle partait pour moins de 90 jours, la touriste américaine n'aurait jamais dû être autorisée à prendre l'avion pour l'Europe sans apporter la preuve qu'elle détenait un billet retour.

Autre source d'interrogations : son passage au consulat. Que s'est-il donc passé le jour où Ann Webb s'est présentée ? Dans son état de panique, n'a-t-elle rien compris de ce que la guichetière lui disait ? S'est-elle par erreur dirigée du côté des demandes de visa pour les Français plutôt que du côté des informations pour les citoyens américains, enclenchant un dialogue de sourds avec la fonctionnaire de l'ambassade ?

Normalement, elle aurait dû être rapatriée dans les trois ou quatre jours ouvrables. Une procédure banale, mise en œuvre en moyenne trois fois par mois, et jusque deux fois par jour au mois d'août, "le plus souvent pour des gens venus avec les Miles accumulés sur leur carte d'abonné d'une compagnie aérienne, mais qui n'ont pas prévu le budget suffisant pour vivre en France". Si aucun proche contacté ne peut aider, l'Etat américain avance le prix du billet, gardant le passeport de l'impécunieux jusqu'au remboursement. Par notre entremise, Ann Webb est invitée à se présenter au consulat dès le lendemain, 9 heures.

"ICI, MÊME LES SDF ONT UNE MEILLEURE QUALITÉ DE VIE"

Elle n'en revient pas. "Evidemment, maintenant je me dis que c'est évident : j'aurais dû insister auprès de l'ambassade. Mais on m'avait éconduite. C'était sans appel. Je pensais qu'ils ne pouvaient rien pour moi." S'y rendra-t-elle le lendemain ? "C'est trop tard, maintenant", tranche-t-elle, à notre grande surprise. "Aux Etats-Unis, j'ai tout perdu. Ma chambre est relouée, mon job a dû être confié à quelqu'un d'autre puisque je ne suis pas rentrée à la date prévue, ma voiture est partie à la fourrière. Je serai une 'homeless', une sans-abri aussi là-bas. Combien de temps me faudra-t-il pour économiser de quoi rembourser le billet d'avion ?"

Son destin, pense-t-elle maintenant, est peut-être de rester en France. "Je me dis que je n'ai pas pu vivre tout ça pour rien. Qu'il doit y avoir une raison." L'expérience de la rue a bouleversé sa "vision de la vie", et l'a rendue "humble". "Je sais maintenant qu'on est tous les mêmes." Elle a côtoyé des Algériens, des Russes, des Ukrainiens, des Africains, des Afghans… Entre deux pleurs, elle en rit. "Moi qui ai toujours voulu connaître différentes cultures !"

Ann Webb rêve désormais de trouver un travail, ici, en France. Même si c'est compliqué, qu'il lui faut apprendre la langue, faire des pieds et des mains pour obtenir des papiers. "Je suis tellement impressionnée par l'absence de violence. Je ne vois des policiers que pour garder la tour Eiffel, je ne croise personne avec un couteau. Je peux laisser mon sac par terre dans un magasin et le retrouver ! L'Amérique, croyez-moi, ce n'est pas ce que les gens pensent ici. Le coût de la vie est si élevé qu'il faut travailler très dur pour tout. Vous n'avez pas idée… A partir de Bush, cela n'a plus été comme sous Clinton. Tout le monde a deux boulots pour nourrir ses enfants. Le 'Land of opportunity', c'est fini !"

Homeless aux Etats-Unis ? Elle n'y survivrait pas, nous assure-t-elle. Tant qu'à être sans abri, elle préfère l'être en France. "Ici, même les SDF ont une meilleure qualité de vie."

Pascale Krémer

Wednesday, February 18, 2009

Les propositions de Nicolas Sarkozy aux partenaires sociaux

LEMONDE.FR avec AFP | 18.02.09 | 15h58 • Mis à jour le 18.02.09 | 18h22

L'Elysée a rendu publiques, mercredi 18 février, les mesures proposées par Nicolas Sarkozy lors de sa rencontre avec les organisations syndicales et patronales. L'ensemble de ces mesures représente un coût de 1,65 à 2,65 milliards d'euros pour l'Etat, selon les chiffres de l'Elysée et en fonction des options retenues. Une enveloppe supérieure à la somme de 1,4 milliard évoquée le 5 février, jugée alors "nettement insuffisante" par les syndicalistes.
  • L'augmentation de l'indemnisation des salariés au chômage partiel à 75 % du salaire brut. "Il n'est pas question dans mon esprit de vous demander de renégocier les accords que vous venez de signer. Je crois en revanche que nous pourrions procéder par voie de conventions ad hoc entre l'Etat et les branches ou des entreprises données, comme nous l'avons fait pour l'automobile", a précisé le président. Le taux d'indemnisation est actuellement de 60 % du salaire brut. Sur ce dossier, le chef de l'Etat a demandé aux partenaires sociaux s'ils étaient prêts à un accord Etat-Unedic pour partager les coûts.
  • La création d'un fonds d'investissement social doté de 2,5 à 3 milliards d'euros financé pour moitié par l'Etat. Cette idée avait été formulée par la CFDT, qui voulait qu'il soit doté de 5 à 7 milliards d'euros et financé par le paquet fiscal (loi TEPA). L'Elysée devrait privilégier un financement conjoint passant par l'Unedic et les fonds de la formation professionnelle.
  • Une prime exceptionnelle de 400 ou 500 euros pour tous les chômeurs "pouvant justifier entre deux et quatre mois de travail", selon l'Elysée. Cette prime devrait être entièrement financée par l'Etat ; son montant n'a pas été annoncé.
  • La suppression d'une partie de l'impôt sur le revenu pour les personnes de la première tranche. Cette mesure prendrait la forme de l'élimination d'une partie de l'impôt sur le revenu pour les familles assujetties à la première tranche d'imposition. Elle se traduirait par une suppression provisoire d'un seul ou de deux tiers provisionnels restant à payer en 2009, avec à la clef un gain moyen de 100 euros pas ménage, selon la présidence. En cas de suppression du deuxième tiers provisionnel, elle coûterait 400 millions d'euros et concernerait 2,1 millions de ménages.
  • Une hausse différenciée des allocations familiales à choisir entre deux options. "La première consisterait à verser une prime aux 900 000 familles, c'est-à-dire de trois enfants et plus, qui bénéficient du complément familial". Ce complément de 161 euros par mois serait doublé. "La deuxième option, qui a ma préférence, consiste en un ciblage plus large, celui des 3 millions de familles qui ont des enfants scolarisés et qui bénéficient aujourd'hui de l'allocation de rentrée scolaire, a poursuivi le président. Une prime de 150 euros par famille pourrait être envisagée pour un coût total de 450 millions d'euros."
  • La non-attribution d'un bonus aux patrons dont l'entreprise licencie. Sarkozy souhaite que les dirigeants de société renoncent à leur bonus "lorsque leurs entreprises recourent massivement à du chômage partiel ou décident un licenciement économique d'ampleur". Il veut confier au directeur général de l'Insee, Jean-Philippe Cotis, une mission d'étude "sur le partage de la valeur ajoutée et son évolution, tant pour le secteur privé que pour les entreprises publiques".
  • La mise en place de "bons d'achat" à la personne, pour l'aide à domicile, la garde d'enfants, le soutien scolaire ou le ménage, à certaines personnes âgées dépendantes et à certains parents pour la garde d'enfants. Parmi les bénéficiaires possibles de cette mesure, le chef de l'Etat a notamment cité les "660 000 ménages bénéficiant de l'allocation personnalisée d'autonomie à domicile et qui ont besoin d'aide à la maison". Il a également ciblé "les 470 000 bénéficiaires du complément mode de garde gagnant moins de 43 000 euros par an, qui ont besoin d'aide pour faire garder leur enfant", "les 140 000 foyers qui ont un enfant handicapé" ou "les demandeurs d'emploi qui retrouvent du travail et ont besoin de solutions temporaires pour faire garder leurs enfants".

Greenspan the Nationalizer

Greenspan Backs Temporary State Control of Banks

By Krishna Guha and Edward Luce in Washington

Published: February 18 2009 00:06 Financial Times

The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman, has told the Financial Times.

In an interview, Mr Greenspan, who for decades was regarded as the high priest of laisser-faire capitalism, said nationalisation could be the least bad option left for policymakers.

”It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring,” he said. “I understand that once in a hundred years this is what you do.”

Mr Greenspan’s comments capped a frenetic day in which policymakers across the political spectrum appeared to be moving towards accepting some form of bank nationalisation.

“We should be focusing on what works,” Lindsey Graham, a Republican senator from South Carolina, told the FT. “We cannot keep pouring good money after bad.” He added, “If nationalisation is what works, then we should do it.”

Speaking to the FT ahead of a speech to the Economic Club of New York on Tuesday, Mr Greenspan said that “in some cases, the least bad solution is for the government to take temporary control” of troubled banks either through the Federal Deposit Insurance Corporation or some other mechanism.

The former Fed chairman said temporary government ownership would ”allow the government to transfer toxic assets to a bad bank without the problem of how to price them.”

But he cautioned that holders of senior debt – bonds that would be paid off before other claims – might have to be protected even in the event of nationalisation.

”You would have to be very careful about imposing any loss on senior creditors of any bank taken under government control because it could impact the senior debt of all other banks,” he said. “This is a credit crisis and it is essential to preserve an anchor for the financing of the system. That anchor is the senior debt.”

Mr Greenspan’s comments came as President Barack Obama signed into law the $787bn fiscal stimulus in Denver, Colorado. Mr Obama will announce on Wednesday a $50bn programme for home foreclosure relief in Phoenix, Arizona. Meanwhile, the White House was working last night on the latest phase of the bailout for two of the big three US carmakers.

In his speech after signing the stimulus, which he called the “most sweeping recovery package in our history”, Mr Obama set out a vertiginous timetable of federal decisions in the coming weeks that included fixing the US banking system, submission next week of the 2009 budget and a bipartisan White House meeting to address longer-term fiscal discipline.

“We need to end a culture where we ignore problems until they become full-blown crises,” said Mr Obama. “Today does not mark the end of our economic troubles… but it does mark the beginning of the end.”

Thursday, February 12, 2009

France-UK Frost

Froid sur les relations franco-britanniques
LE MONDE | 09.02.09 | 15h13

La lune de miel entre Paris et Londres est terminée. Nicolas Sarkozy y a mis un terme, jeudi 5 février, en critiquant la politique économique de Gordon Brown, qu'il avait pourtant saluée à de nombreuses reprises cet automne. Son "amitié" pour le premier ministre britannique, sa "confiance" et son "estime" ont laissé place à un certain mépris, que le 10 Downing Street n'a que modérément apprécié.

"Franchement, quand on voit la situation aux Etats-Unis et au Royaume-Uni, on n'a pas envie de leur ressembler", a lancé M. Sarkozy. Au Royaume-Uni, la baisse de la TVA de 17,5 % à 15 % au 1er décembre n'a "amené absolument aucun progrès", a-t-il poursuivi. Mais, a-t-il précisé, "si les Anglais ont fait ça, c'est parce qu'ils n'ont plus d'industrie, à la différence de la France. L'Angleterre, il y a vingt-cinq ans, a fait le choix des services et notamment des services financiers".

"L'Elysée nous a contactés pour nous assurer que ces commentaires ne visaient pas à critiquer la politique économique du Royaume-Uni. Ce qui est gentil", a ironisé le service de presse de M. Brown. L'équipe du premier ministre a précisé que, contrairement aux allégations du président de la République, l'industrie britannique n'a rien à envier à sa concurrente hexagonale, comme en atteste le dernier chiffre disponible de la Banque mondiale : en 2006, l'industrie représentait 24 % de l'économie britannique et 21 % de la richesse nationale française.

Pour M. Brown, qui appelle à une coordination des politiques économiques alors qu'une réunion du G20 doit se tenir à Londres en avril, la sortie de M. Sarkozy tombe mal. D'autant qu'elle succède à d'autres. Wouter Bos, le ministre néerlandais des finances, a jugé la semaine dernière qu'une baisse de TVA "n'était pas avisée".

Virginie Malingre
Article paru dans l'édition du 10.02.09

Problems with Public-Private Partnerships

Public-privé, des ratés en série, par Virginie Malingre
LE MONDE | 09.02.09 | 13h46 • Mis à jour le 09.02.09 | 13h46


Uu jobcenter de mon quartier, quand j'ai rempli le dossier pour obtenir un "national insurance number", nécessaire pour des formalités administratives qui n'ont pas besoin d'être détaillées ici, l'employé chargé de mon cas a décidé que je cherchais "activement un travail". "Vous travaillez à la maison, votre employeur est en France. C'est compliqué. Après tout, ce que vous voulez, c'est votre "national insurance number". De toute façon, personne ne vérifiera", m'a-t-il expliqué. Je me suis imaginée aux allocations familiales en France, demandant un numéro d'allocataire. Et là, c'est sûr, on m'aurait gardé le temps nécessaire plutôt que de me faire mentir.

"C'est une histoire typiquement britannique, m'assure Patrick Dunleavy, professeur à la London School of Economics, spécialiste du service public. La personne qui vous a reçue doit traiter un certain nombre de dossiers par jour." Et son salaire dépend de sa performance. Le service public britannique s'est mis aux méthodes du privé avec zèle. Il se donne des objectifs aussi bien pour remplir ses lits d'hôpital que pour faire arriver ses trains à l'heure. Et distribue des bonus aux bons élèves.

"Après tout, ce que vous vouliez, c'était votre "national insurance number". Il a satisfait tout le monde, vous et son patron", conclut en riant M. Dunleavy. En l'occurrence, personne ne pâtira de cette fausse déclaration, si ce n'est les statistiques nationales, qui vont me comptabiliser comme chômeuse. Mais quand le secrétaire d'Etat à l'immigration, Phil Woolas, annonce, la semaine dernière, que ses services ont perdu 17 000 dossiers de réfugiés demandant l'asile - ils se sont évaporés entre deux bureaux -, on imagine le désarroi des individus concernés, dont certains attendent depuis plus de dix ans une décision.

Il ne se passe pas une semaine sans que la presse relate un bug de l'administration, aux conséquences plus ou moins dévastatrices. Pourtant, sous l'impulsion de Tony Blair, le secteur public s'est étoffé : il emploie aujourd'hui 5,8 millions de personnes, soit 20 % des salariés du pays, et les salaires y sont supérieurs à ceux du privé. Mais la City a longtemps aspiré les talents britanniques. Et les réformes que les gouvernements successifs ont menées depuis vingt ans, si elles ont amélioré l'efficacité des services publics, ont parfois été contre-productives.

Ainsi la fragmentation des tâches, qui devait permettre de lutter contre une bureaucratie excessive, s'est retournée contre ses concepteurs. L'affaire Baby P. - cet enfant mort début novembre sous les coups de ses parents - est de ce point de vue fort instructive. Soixante personnes de différents services publics (santé, police, école, assistance sociale...) avaient eu affaire à la famille sans qu'à aucun moment ces gens ne se parlent.

Fin novembre 2008, l'Ofsted (Office for Standards in Education, Children's Services and Skills), responsable des services d'inspection, dévoile dans un rapport accablant que quatre enfants meurent chaque semaine en Angleterre, comme Baby P., de violences parentales et de négligences des services sociaux. Quelques jours plus tard, le ministère de l'éducation et des familles, qui n'a pas supervisé le travail, corrige : le bon chiffre n'était pas 4 mais 1...

En France, pointe M. Dunleavy, "vous faites encore les choses à l'ancienne. Vous vérifiez quatre fois une information avant de la publier". Indéniablement, jamais Bercy n'aurait mis sur son site Web la mauvaise version de son projet de budget, comme l'a fait le Trésor fin novembre. Version qui a permis au pays d'apprendre que le gouvernement avait envisagé d'augmenter la TVA en 2011, après les prochaines élections.

Sir Digby Jones, ancien secrétaire d'Etat au commerce qui a démissionné en octobre, juge que Whitehall pourrait fonctionner avec "moitié moins de fonctionnaires". L'homme est connu pour ses sorties intempestives. Mais il est vrai que le secteur public britannique multiplie les ratés. Pour autant, quand le privé s'en mêle - ce qui se fait de plus en plus -, le résultat n'est pas concluant. Ainsi, juste avant Noël, 100 000 fonctionnaires ont appris qu'ils avaient reçu pendant trente ans une retraite trop élevée. Et qu'ils verraient son montant diminuer pour compenser le trop-perçu de 140 millions de livres. Tout ça parce que l'entreprise Xafinity, qui s'occupe d'une partie des retraites des fonctionnaires du National Health Service et de l'armée, s'est trompée dans ses calculs pendant trois décennies !

Là aussi, juge M. Dunleavy, "c'est typique. On demande à ces sous-traitants d'être le moins chers possible. Et en même temps, l'administration perd son expertise sur ces sujets qui sont externalisés". Et s'avère incapable de contrôler. C'est comme ça que, en novembre 2007, le fisc a laissé partir dans la nature les données fiscales de 25 millions de contribuables. La Cour des comptes lui avait juste demandé 20 000 dossiers anonymes. Mais personne au Trésor n'était capable de transférer ces données. Il a du coup été fait appel à un prestataire extérieur qui, pour réduire les coûts, est allé au plus simple : copier sur un CD tous les dossiers sans prendre la peine d'enlever les données confidentielles, et l'envoyer par la poste. Le courrier n'était pas recommandé - trop cher sans doute - et s'est perdu...

Courriel : malingre@lemonde.fr.

The Right's Policy and Strategy

What Works Doesn't Work

by Ross McKibbin

London Review of Books September 11, 2008

In 1964, Harold Wilson described the record of the (outgoing) Conservative government as ‘13 wasted years’. If the present Parliament lasts its full term – as seems likely – the electorate will be asked to pass judgment on 13 years of Labour rule. Voters today seem to have the same view of Labour as Wilson had of the Tories all those years ago. Many who once wished Labour well are now wondering whether they can vote Labour at all, or whether they should stop voting tactically. This is an important decision: the Labour majorities in the last three elections have been much enlarged by people choosing to vote for the candidate thought most likely to defeat the Tory – a spontaneous alternative vote. Since the country’s politicians have refused to reform the country’s medieval system of voting, the electorate has reformed it for itself. But it is a reform without any statutory basis: people can choose to practise it or not. Labour thus faces a double threat. Not merely that people will no longer vote Labour, but that they will vote as they really want to – Lib Dem, for example – whatever the consequences. And they will do so because they no longer believe keeping the Tories out is the main object of politics. Labour’s position, though not irrecoverable, is therefore serious, approaching desperate.

There is no simple reason why this has happened. It can’t just be the state of the economy. However bad that is or might become, it’s unlikely to be as bad as the recessions of the early 1980s or early 1990s, neither of which were fatal for the Conservatives. One possible explanation is that the electorate has finally recognised how fraudulent New Labour always was. An attractive idea, but probably wrong. However fraudulent it has become, it didn’t seem fraudulent at the beginning. There were good reasons in the early 1990s for Labour to reorient itself and to do so publicly: the party had to adjust to the kind of society Britain had become and be seen to do so. It wasn’t merely that Old Labour had been keen on nationalisation and high taxation; it was also deeply conservative in its attitude to the country’s political institutions and to bodies like the EU. But by the 1997 election it was already obvious that any properly considered policy of ‘reform’ was to be sacrificed by the party’s leadership to the construction and then extirpation of a caricature of Old Labour. As an electoral strategy the two things – the construction of a stereotype and its triumphant stamping out – went together. It seemed a brilliant idea at the time, but it has landed the government in its present mess. Why was it adopted?

Partly it was a consequence of the loss of four elections in a row and an entirely reasonable feeling that there must be more to political life than perpetual defeat. Neil Kinnock and John Smith felt this as strongly as their successors, but their successors went a lot further. In a famous essay published nearly ninety years ago, Max Weber suggested that politics was becoming the territory of the professional: politics was the politician’s whole life, his ‘vocation’, and the modern political party was his home. Others, like the Italian sociologist Robert Michels, argued further that for the modern politician the political party was a form of social mobility, so that eventually the protection of the party’s bureaucratic structures – the machine – became more important than the interests of the people the parties were supposed to represent.

Professionalisation has always been a necessary characteristic of modern British parties, but in the last twenty years or so extreme professionalisation has become the dominant characteristic. The typical politician today, whether minister, shadow minister or ‘adviser’, proceeds from student politics (often with a politics degree), to political consultancy or a think-tank, to ‘research’ or the staff of an active politician. He or she is ‘good at politics’ – which means being good at the mechanics of politics, not necessarily at its ideas. The consequence is that the mechanics drives out the ideas, and the immediate expels the long-term. Politics is what the Daily Mail says today; the long-term is what the Daily Mail might say tomorrow. The crucial relationship now is between the politician, the journalist and the ‘adviser’.

Meanwhile, opinion is continually tested, but not in ways likely to supply anything other than the desired answer: what the opinion-testing seeks is ways to achieve the answer that’s wanted. So today’s politician falls into the hands of the focus group. But the focus group, and the question on which it is asked to focus, is manipulated by the political consultant every bit as much as the focus group manipulates him. Each deceives the other. The result is that the political experience of the modern politician, the person good at the mechanics of politics, is exceptionally narrow: the political elite is now probably more divorced from society, and from any wider organising principles or ideology, than at any other time in the last 150 years.

The culture of the focus group does not, however, lead to an apolitical politics. On the contrary, it reinforces the political status quo and encourages a hard-nosed, ‘realistic’ view of the electorate that denies the voter any political loyalty, except to ‘what works’. ‘What works’, though, is anything but an objective criterion: these days it is what the right-wing press says ‘works’. The war on drugs doesn’t work; nor does building more prisons; nor, one suspects, will many of the anti-terror laws. But that doesn’t stop ministers from pursuing all of them vigorously. New Labour in practice is much more wedded to what-works politics than the Conservatives were under Thatcher, who was openly and self-consciously ideological.

Much of the present malaise in British politics flows from this. Among other things, what-works gives the wrong answers. The classic example is the 42-day detention legislation. The only rational explanation for the government’s return to this matter, for the extreme pressure put on Labour MPs by the whips and for the MPs’ willingness to live with the ensuing moral obloquy, is that the government believes the legislation will enable them to trump the Tories on the issue of security. The electorate wants to lock up terrorists, the Conservatives are opposed to 42-day detention; therefore, the government wins the allegiance of the electorate. But of course that hasn’t happened: the 42-day legislation has had no discernible effect on the electorate’s view of the government.

This is a persistent error of modern politics. Blair spent much of his premiership devising ways in which the Tories could be made to look ‘soft’ on crime, terror and all the rest on the understanding that this was an election-winner for Labour. But there is no historical evidence that any British election has ever been won on issues of ‘crime’ or ‘security’. Or that Labour, in so far as crime and security do matter, could ever trump the Tories. Blair didn’t win because of Tory softness, though he was told by the political professionals – as presumably was Brown – that this is how elections are won.

The effect has also been to neuter the cabinet. The present cabinet has become the most lightweight in living memory. Some of its members are so lightweight they shouldn’t be in the cabinet at all; a few shouldn’t even be in the Labour Party. Were Labour to think it necessary to remove Brown there is no plausible successor, no one guaranteed to be more popular. All have been damaged by New Labour’s political mechanics. Most are regarded by the electorate with a degree of distrust unusual in British politics.

Almost all the main premises of Thatcherism were adopted as policy by New Labour without it ever being formally avowed, and without anyone worrying much about whether Thatcherism ‘worked’, because the political professionals told ministers that they had to accept the lessons of the 1980s – despite the fact that in the 1980s Blair and Brown had a very clear idea of what Thatcherism was up to. Evidence that suggested most people had no real sympathy for what Thatcherism had become was discounted in favour of focus-group truths: taxation (too high), crime (too much), choice (not enough), asylum seekers (too many), the public sphere (too big). The elimination of these blemishes became the desideratum of politics.

These truths were accompanied by focus-group fairy tales about the economy, the focus group in this case being the Treasury and most of the press. Thus the disappearance of much of manufacturing (and its continuing decline under Blair and Brown) is OK because manufacturing was only ‘metal-bashing’ (Treasury-speak of the 1980s), and in any case we weren’t very good at it. What we were good at was services. Indeed, we were so good at services that what was happening here today would inevitably happen everywhere tomorrow – and not least in Germany, with its inflexible labour markets and hopeless addiction to metal-bashing. Nothing has been more embarrassing than the insistence – and Labour was still at it a couple of months ago – that Germany could be really successful only when it adopted the British model. That Britain has experienced real gains in the standard of living in the last fifteen years is undeniable; and no one regrets that. It’s what underlies those gains that is alarming: very largely, now as in the late 1980s, the inflation of asset prices, usually housing, and the huge expansion of credit dependent on those inflated prices. One might have thought that Brown, being a prudent man, would have preferred the German model, where the inflation of house prices is regarded as a bad thing, to the British one, where it is regarded as good – and not just good, but absolutely necessary.

The evidence is there for everyone to see, yet the rackety structure is kept in place. Now it turns out that the value of service exports has never equalled the value of manufacturing exports and that we weren’t in any case all that good at services – which is one reason so many of the City’s financial institutions are now foreign-owned. The other reason is that we have had to sell them to cover the country’s immense current-account deficit, which is of a size that would once have brought a government down. One typical New Labour wheeze that bears all the hallmarks of the ‘professional’ politician was Brown’s decision to let the Bank of England determine interest rates via its Monetary Policy Committee, and his stipulation that its primary purpose must be to keep inflation at low levels.

The reasons for doing this were, first, the belief that inflation was the principal blight on the economy and that controlling it would guarantee perpetual trouble-free growth; and, second, that trouble-free growth could best be achieved by handing over the setting of interest rates to an ‘objective’ authority like the Bank – and if it wasn’t achieved the Bank would get the blame. Surely someone must have known that this was unlikely to ‘work’ except in the most benign circumstances. Historically, inflation is only one of the blights on the British economy and often not the worst. The Monetary Policy Committee of the Bank is now faced both with moderate inflation, almost all imported and barely susceptible to internal correction (though higher interest rates are nonetheless demanded), and declining economic growth, a decline that higher interest rates would accelerate. How in these circumstances can it possibly guarantee inflation-free growth? Of course it can’t, and the government predictably has got the blame.

Then there are the party-political wheezes: inviting Thatcher to tea, for example, an occasion presumably intended by the prime minister’s staff to finish off the Conservative Party, but so sickeningly transparent it marked the beginning of Brown’s disasters. Since New Labour’s view of the electorate is as contemptuous as that of the popular press, the casual instrumentalism of its policies has induced real moral decay in the government. The shocking increase in the prison population and the treatment of asylum seekers or ‘illegal’ immigrants – not to speak of Iraq – are among the most shameful policies in the history of the Labour Party, but probably few of those responsible now lose much sleep over such matters.

At the same time, ministers are trapped inside a vocabulary from which anything that smacks of Old Labour, or rather the stereotype of Old Labour – fairer taxes, for instance – has been excluded because it would send out the ‘wrong signals’: particularly to that artefact of modern politics, the ‘aspirational classes’. These were the grounds on which the possibility of increasing taxes on those earning more than £100,000 a year was recently ‘dismissed’. Who the aspirational classes are, and why the signal would be wrong, wasn’t disclosed.

These rhetorical constraints have undermined the government’s actual achievements, especially in education and the NHS. New Labour gets scarcely any credit for the great improvements in the NHS because Blair spent all his time saying that yet more reforms were necessary in order to provide ‘choice’, presumably for the aspirational classes. Recently, Brown asked rhetorically whether the Tories would continue with the present programme of school building and improvement: a big programme and long overdue, but I doubt the electorate knows that. All they know about is ‘failing schools’ because failing schools is all ministers ever talk about.

This, however, is not the whole story of New Labour. Were it all merely about privatisation, the aspirational classes and crime it would be much easier: James Purnell could continue to privatise everything and Jack Straw to build dozens of gigantic prisons. That at least has coherence. But the Labour Party has a history and an institutional memory, even to those who seem most oblivious of it. The fact is that Labour’s social-democratic past won’t go away, and this has produced major tensions within the party which, while they give cause for hope, have also made things more complicated. Thus Brown, who has so far been a dud prime minister and in many ways was a dud chancellor, is also the man who has done more than anyone to save Labour’s reputation. He spent money and wanted to spend it. Britain is a better country than it was in 1997 and that is largely thanks to him. Furthermore, he is probably the only minister who has put the Tories on the defensive. Few Tory front-benchers now publicly defend the non-spending of the 1980s.

The tension manifests itself in other ways. There has always been a tug-of-war between Labour’s secular and religious traditions. Labour, we have been told, ‘doesn’t do God’. Historically, however, it has often done God – and was certainly doing God when Blair was prime minister. Faith schools, legislation against the promotion of religious hatred, the encouragement of religious charities and associations, the well-advertised religious beliefs of many ministers, were all very much in evidence. At the same time the party’s secular tradition continually reasserts itself – particularly when the whips are removed. The House of Commons, by surprisingly large majorities, approved very liberal boundaries for stem-cell research. One of the few occasions (so far as we know) when the cabinet overruled Blair was over proposals to exempt Catholic adoption agencies from new anti-discriminatory rules. Faith schools were always much more popular with ministers than with the party at large – and are now not even very popular with ministers.

Tension between the religious and the secular has been further complicated by a redefinition within the party of moral worth and the moral sphere. Apart from those who earn more than £100,000 a year, the gay community, for example, has probably done as well under New Labour as anyone else. Thatcherism didn’t entirely exclude the gay community from the moral sphere but certainly didn’t embrace it (see Section 28). Under Labour, however, gays – to the extent that there is a collective gay will – have gained most of what they wanted politically. That is long overdue; but it has been accompanied by the moral exclusion of those who were once thought part of Labour’s natural constituency – the social underdogs. Young working-class males are more likely to go to jail under Labour; they are more likely to be excluded from school; their parents are more likely to be judged incompetent; their style of life is more likely to be thought socially dysfunctional; and the government prefers to decant them from the sphere of moral worth rather than admit that deprivation plays an important part in any of it.

This is a result of deep unease in the Labour Party about what constitutes modern democracy. In its social manners Britain has rapidly become a very democratic society. Old forms of respect and the deference due to traditional hierarchies have not altogether disappeared, but they have been profoundly weakened. In the daily exchanges of life Britain is now very like North America or Australia: ubiquity of the Christian name, casualness of dress, universal ignorance of social forms once thought essential; opposition leaders who wander around in shorts and T-shirts and pretend they never went to Eton. Tony Blair is the political personification of a democracy of manner – it was part of his popularity. Differing lifestyles have become not social threats but part of the acceptable plurality of democratic life. Democracy of everyday life is certainly not incompatible with social democracy – social democratic parties have traditionally been sympathetic to it – but under Labour the two are in danger of becoming alternatives. Britain is now a very much more unequal and less socially mobile society than it was thirty years ago, and while Labour isn’t responsible for that it has done little to correct it.

Much of this is also true of the New Conservatives. As the election approaches we might expect them to show their real colours. But so far they haven’t. They will obviously be under pressure to do Thatcherite things: the economy, we will be told by the popular and financial press, is a ruin and public spending must be cut and cut. At the moment, however, Cameron is clearly doubtful about the wisdom of these particular fairy stories. The Tories have been put on the back foot over public spending and have discernibly edged away from Thatcher and her traditions. It is possible that in two years it will be tax cuts all round; but that will require some shifting of ground.

The Tories would love to escape any blame for Iraq, and William Hague does seem to have learned some lessons. Iain Duncan Smith has emerged as an unexpected champion of social solidarity: a major advance in that wing of the Conservative Party. And for whatever reason, whether principle or political expediency, the Tories have recently shown a more tender regard for civil liberties than Labour. They now appear sceptical of the test-ridden, league-table-ridden regime which is slowly wrecking the schools, and might even relax it. Cameron has recognised that he too must adjust to the demands of the democratic lifestyle. On the other hand, the Tories are in favour of ‘choice’ in health and education, locking people up, silly, even dangerous, policies towards the EU, punitive policies towards immigrants and asylum seekers, welfare ‘reform’ on the American model. And Cameron wishes to transform the economy as Thatcher did – and he doesn’t mean that ironically.

In fact, the Conservatives are subject to the same tensions as Labour, the same conflict between ends and means. George Osborne recognises that 11 years of New Labour have not procured social justice, but like New Labour he wishes to mobilise the free market to repair the deficiency. Like James Purnell, he wants to place large chunks of social policy into the hands of the charitable and voluntary sector – a version of the Private Finance Initiative. However, the free market can do many things but guaranteeing fairness is not one of them. Equally, the voluntary sector can do many things but it can’t provide serious solutions to national welfare problems.

What happens to the privatised welfare services is well known (though not to the modern politician); as with the PFI, the private sector does the easy bits and the public sector picks up the pieces. Like Labour, the Conservatives want to provide ‘choice’ and ‘competition’ within the educational system, but want it to be socially inclusive too. Unfortunately, you can’t have both; and it is social inclusion that will disappear. The Tories are aware that there is a problem which the 1980s in some ways made worse, yet, like Labour, they wish to solve it with confused and often self-defeating policies. And, like Labour, the Tories are increasingly unsure how far the ethnic communities can be contained within the remit of lifestyle democracy, how viable multiculturalism now is.

The voter is thus faced with difficulties the British party structure is very ill-equipped to resolve. That structure has a fundamental fault: the different parties no longer stand for differing opinions. It is possible to imagine another, more representative structure. There would be a party of the moderate left, undoubtedly led by Vince Cable, which would include some Labour backbenchers (but no member of the present government), some Lib Dems (but probably not their leader), and perhaps Tories like Kenneth Clarke and Ed Vaizey. There would be a centreish party which would include Brown, some members of the cabinet, most Lib Dems, a large part of the Parliamentary Labour Party, probably William Hague, Theresa May, Alan Duncan and a few other Tories; Cameron and Osborne might be honorary or temporary members. The party of the right would include everyone else (including many members of the government). This would offer a more accurate representation of opinion than will be presented to the voter at the next election. The only problem is that there is no system at the moment by which the voter can choose between these ‘parties’. And, given that most politicians are told what the voter wants by people who are poor judges of that, there is no certainty that being able to have such a choice would make any difference.

In these circumstances it may not matter much what party anyone votes for; though it could certainly matter which individual you vote for. But the election is probably two years away: time enough for Labour to make voting for them a rational option. At present Labour is not doing that. Brown and his colleagues are so conditioned to a particular political response – choice, voluntary sector, the market, competition etc – that they are more or less sleepwalking. What, they would do well to ask, is most likely to put the Conservatives on the defensive? In other words, what is most likely to make the electorate frightened of a Tory victory? More privatisation, more prisons, ‘tough’ welfare, the world’s most guarded borders, the free market, more adventures abroad with the Americans: none of these will frighten the Conservatives – but they might frighten the electorate.

Labour has so narrowed its chances that it has only one shot left: increased public spending on social infrastructure. And that means reminding the electorate exactly what the 1980s were like – however much that goes against the grain. The Conservatives know that the electorate is sceptical of their change of heart; and Conservative spending policies at present bear little detailed scrutiny. Labour’s record is itself very mixed – a quick glance at the railways confirms that – but popular memory of the falling down hospitals and decaying schools of the 1980s is now all it has got. Yet Brown says little and even that is mostly a mumble – when he should be saying much, loudly. But no doubt if he did that, someone would tell him he was sending out the wrong signals.

There is one more possibility: reform of the voting system. Labour’s failure to do this over the last 11 years has been unforgivable. Done now it would have only one obvious justification: saving Labour’s electoral bacon. But so what? Labour has done so many cynical things in the last decade that its reputation for cynicism could hardly get worse. This wouldn’t be the most cynical – and there is still time to do it. Merely to suggest it, however, makes one realise that it won’t happen.

Ross McKibbin is a fellow of St John’s College, Oxford, and the author of Classes and Cultures: England 1918-51 and The Evolution of the Labour Party: 1910-24


Monday, February 9, 2009

Why Vote for Barack Obama?

Why Not Eat an Eclair?
David Runciman
LRB 9 October 2008

Review of Free Riding by Richard Tuck

Why would anyone vote for Barack Obama? Not why would anyone want to see Obama elected president rather than John McCain (or Hillary Clinton for that matter), but why would anyone who desired that outcome think that his or her individual vote could make the slightest difference in helping to bring it about? General elections are never decided by a single vote, so no one’s vote is ever going to be missed. If you want Obama to win, and plan to vote for him, but you forget, or find yourself otherwise detained, don’t worry – the final result will be unaffected by your failure to show up, even if you happen to live in a swing state like Ohio or Florida. If Obama is winning the state, he will do perfectly well without you; if he is losing, there is nothing you can do to help him get over the line, because the winning line will always be further away than your paltry individual vote. Either way, you are not needed, so why bother to vote at all?

This is a question that has haunted the study of politics for the past fifty years or more. Because political science has been dominated by economics, the problem is often put in terms of costs and benefits. Going to vote is not a costless exercise, since it takes time and effort that could be spent doing other things. You might not consider this much of an outlay, but if you reflect that the benefit you can expect to derive is precisely zero, since your contribution is literally worthless, then it starts to look like a serious waste of your precious resources. One possible way round this problem is to argue that although no election has ever been decided by a single vote, that doesn’t mean it couldn’t happen. The effort of dragging yourself to the polling station is a small price to pay for insuring yourself against the monumental regret you would feel if you stayed at home the one day your vote was really needed. The prospect of waking up to find yourself the person who cost Obama the presidency is so ghastly it’s worth hedging against that possibility, however remote.

It’s a sign of the tangle that political science has got itself into over the problem of voting that this solution was ever seriously canvassed. Not only is it psychologically implausible – is this how you think, even subliminally, when you leave the house on election day? – but it also flies against the evidence of what happens when elections are really close. The assumption is that the tighter an election, the nearer one gets to the holy grail of a contest that could be decided by your personal contribution; in fact, the tighter the election, the less likely it is that any one person’s vote is going to settle it. Just think about what happens during recounts in a parliamentary constituency at a British election: the count doesn’t go on until the correct result is achieved, but until one side gives up in exhaustion or despair. The figures produced by a recount almost never tally with those given first time round, so if the margin were a single vote that would in fact be a reason to count again in order to produce a bigger margin one way or the other. The narrowest margin in modern times is two votes, achieved by Mark Oaten for the Liberal Democrats at Winchester in 1997; his Tory opponent managed to get the result declared void by the courts on the grounds that some of the ballot papers had not been properly stamped. Oaten won the rematch with a majority of more than 20,000. Or think about what happened in Florida in 2000. Does anyone know what the true count was in that election? Perhaps there really was a single vote in it. But the enduring image of squint-eyed counters peering forlornly at hanging chads is enough to confirm that if there was a single vote in it, no one was ever going to find it. When an election is as tight as the presidential contest in 2000, the individual votes that might decide it disappear in a miasma of political confrontation and confusion.

In the end the 2000 presidential election was settled by a single-vote majority, the five-four decision of the Supreme Court to confirm Bush’s victory in Florida. The votes of small bodies often do come down to the choices of individuals. But no one would mistake the Supreme Court’s judgment for a democratic decision; it was a collective judgment of a very different kind. Moreover, because the justices voted along party lines, it is hard to say which one of the five actually swung it (though any of them could have swung it by voting the other way). To know that your vote was the crucial one, what you really need to do is switch sides at the last minute. For example, the second reading of what became the 1832 Reform Act was passed in the House of Commons on 23 March 1831 by a single vote. As Boyd Hilton writes in A Mad, Bad and Dangerous People: ‘The decisive vote was that of John Calcraft, who . . . finding his own seat threatened with disfranchisement, spoke violently against the Reform Bill, but changed his mind at the last moment, and voted for the second reading. He killed himself six months later, correctly imagining himself to be hated by both sides equally.’ Most people, I guess, would be willing to expend considerable effort to ensure they didn’t find themselves in that position.

Perhaps the problem here is that economic political science is too used to thinking about voting in terms of what’s in it for the individual – the assumption being that people put something into the voting system in the hope of getting something out. What if we imagine voters as selfless beings who do not begrudge the time and effort of casting a ballot and simply want to do their bit for democracy? Don’t these people have a reason to participate? Unfortunately, the answer still looks like ‘no’, because the selflessness of one’s motives has no impact on the usefulness of one’s contribution to group activities on this scale. This was a point made by Mancur Olson in 1965 in The Logic of Collective Action, which is often seen as initiating the widespread acceptance of the problem of ‘free riding’ for large group activities, the free rider being the person who, seeing that his individual contribution doesn’t make any real difference to a collective endeavour, decides to withhold it and simply surf off the wave created by the other group members (the problem being that if everyone did that, there would be no group). Olson wrote that the futility of the ‘imperceptible’ contribution holds true ‘whether behaviour is selfish or unselfish’, something he illustrated as follows:

A man who tried to hold back a flood with a pail would probably be considered more of a crank than a saint, even by those he was trying to help. It is no doubt possible infinitesimally to lower the level of a river in flood with a pail . . . but . . . the effect is imperceptible, and those who sacrifice themselves in the interest of imperceptible improvements may not even receive the praise normally due selfless behaviour.

The real-world example Olson gave was farmers in the American grain market. If a selfless farmer, worried about the suffering of his colleagues because of depressed prices, decided to lower his own production levels in order to raise prices, it would be a pointless gesture, because overall price levels would be unaffected by a single decision of this kind. He would simply lose money, and look like a fool. The selfless farmer would be much better off exercising his philanthropy in a way that actually produced a perceptible effect on someone, by some direct act of charity. Olson went on to hint that in a first-past-the-post electoral system similar problems are bound to affect the motivations of individual voters, who will recognise that ‘if their party is going to win, it will as likely win without them.’ He did not push this point, and appears to have felt that voting might be a special case that needed further consideration. However, as Richard Tuck points out in his fascinating new book about the strange hold that the free rider problem has had on political science ever since Olson, such misgivings have not stopped many of his followers from treating voting as the paradigmatic case of the problem of the worthlessness of individual contributions to the actions of large groups.

But if we go back to Olson’s example of the man with the pail, it’s immediately clear that there is something different about voting. A single person trying to hold back a flood with a bucket is going to look and feel extremely odd and ultimately foolish. But if on election day you find yourself the only person at the polling station, though you might feel odd and somewhat uncomfortable, you will not conclude that what you are doing is pointless. Indeed, if you really are the only person who turns up to vote, then your vote will decide the election. Moreover, while seeing someone trying to bail out a river with a bucket gives no one else an incentive to join in, seeing one lonely voter at the polling station does give other people an incentive to take part, if only to prevent that individual from deciding for everyone else. That’s why (unless there has been a boycott) you don’t see elections at which the number of voters drops away to nothing. The closer it gets to zero, the more reason there is to vote, which means it will never get close to zero at all. But there is still a puzzle here: if it is worth voting in order to prevent the number of participants falling so low that a single vote can decide an election, then the worth of an individual vote is measured by how much it ultimately diminishes the worth of an individual vote. Your vote counts only in so far as it guarantees that your vote doesn’t count. So you might still find yourself asking, why bother?

Tuck has an answer to this question that entirely recasts the terms of the free rider problem, by treating voting as a paradigmatic instance of a collective activity in which individual contributions do count. For Tuck, what is distinctive about voting is that success is in the end defined in numerical terms: you always, and only, need to get more votes than the other side to win, so there is a cut-off point at which victory is certain. Tuck calls this a ‘threshold’, and he points out that at the threshold, one vote settles it. This is how elections worked in ancient Rome, where a roll-call of voters would be taken in sequence, until one candidate had enough votes to be guaranteed victory. In this process, the last person to vote for a candidate causes that candidate to be elected. So the crucial fact about voting is that one vote can indeed make all the difference.

But this hardly seems to resolve the problem of the worthlessness of individual contributions, since it only addresses the ultimate worth of the vote of the final person to be called. What about everyone else, both all those who voted before the lucky threshold-crosser and those who would have voted after, but ended up not being needed? What is distinctive about Tuck’s account is that he is able to extrapolate from the value of the vote that tips the balance a value for the other votes as well. It is not just the last vote that counts, because the last vote would not count without all the individual votes that preceded it. So every vote that contributes to a threshold being reached plays a full and equal part in getting a candidate elected. As Tuck says, this understanding fits with common sense and with common law. If it takes six people to lift a lifeboat and only five are on the beach, you don’t say that the sixth person to show up is responsible for lifting the boat on his own. Equally, if it takes six people to lift a boat in order to steal it, the law says that all six are fully responsible for the crime, as though each had committed it on his own. If it takes ten million people to elect a candidate, then all ten million are responsible for the election, even though it only takes one of them to tip the balance.

However, if ten million people are needed to elect a candidate, and fifteen million turn out to vote for that candidate, what about the other five million? Do their votes count for anything? One way of reading the example of Roman voting by roll-call is to imagine that the extra votes are there to guarantee victory. If you need a certain number of votes to win, it would be crazy to send exactly that number of voters to the election in case one of them has an accident along the way (or, worse still, does a Calcraft and switches sides at the last moment). But the fact that other voters are there to step into the breach in case the threshold-crosser goes missing raises a new problem because it suggests that the threshold-crosser was not needed after all – someone else would have tipped the balance instead. Is it possible to believe that you are the cause of a particular result if the same result would have occurred without you? Many philosophers are wedded to a counterfactual conception of causation, which insists that for any given cause there must be an effect that no other cause could have produced, but Tuck shows that there is no reason to think like this. Again, a legal example shows why. If two police officers have their guns trained on an armed man during a bank robbery, and one of them shoots the man dead, we do not think that this officer was not the cause of the robber’s death because if his shot had missed, the second officer would have fired and killed him. You can cause something to happen without being the only person who could bring it about. So your vote can be the cause of a candidate’s victory even if the candidate would have won without you.

Tuck’s argument does imply that once a threshold has been reached, the extra votes don’t actually count for anything. In the Roman case, there might have been some resentment among people who had waited around all day in the hot sun only to be told their contribution was now redundant. This is one obvious advantage of the modern electoral system, which counts votes anonymously and more or less simultaneously. No one can say for sure whether his or her vote was in the necessary set that crossed the threshold or in the redundant set that was simply there as insurance. Voters have an incentive to vote precisely so that they can think of their votes as having been part of the group that tipped the balance. Though Tuck does not mention it, this might explain the growing popularity of postal voting, which is normally justified in terms of convenience (something that seems odd, as so often with voting, since the margins are so small); in fact, there is an obvious attraction in voting early if you want to think of your contribution as laying the foundations for a big enough pile.

What Tuck does say is that seeing voting in these terms helps explain a phenomenon that has otherwise baffled political scientists: the ‘bandwagon effect’, where the more popular candidates pick up great chunks of extra votes as soon as they look like they are going to win. If voting was about trying to make the crucial difference with your individual vote, then the more popular candidates became, the less reason there would be to vote for them. But if voting is about trying to belong to the group that makes the overall difference, then your chances of being in that group increase as the candidate looks more and more certain to win. This fits with the empirical evidence: when a contest is no contest at all, because one side is likely to get almost all the votes, then turn-out falls, because the vast majority of voters fall into the redundant group whose votes weren’t really needed. But turn-out doesn’t necessarily rise the tighter a contest gets. A close contest increases the chances of your vote being decisive, but it also increases the chances that your candidate might lose (at which point your vote will have lost all its causal efficacy). A more one-sided contest increases the chances that your vote will be redundant, but also increases the chances that it will have played a part in actually getting someone elected. Why vote for Obama? Well, one possible answer is that there is a pretty good chance that a vote for Obama might actually cause him to be elected, and that you can wake up the next day with a warm glow. It is part of the genius (or cynicism, depending on your perspective) of Obama’s rhetoric to have tapped into this – you are the change you’ve been waiting for, and voting for me will prove it.

But why vote for Obama in a place like Utah, where you know your vote isn’t going to make any difference because the Republicans have a lock on the state? Tuck hasn’t got much to say about voting for obviously losing candidates, though he accepts that the motivations here maybe complicated. You might simply want to send a signal that nothing and no one in politics should be taken for granted – that there is at least one Communist in Kensington. But Tuck is rightly suspicious of a general trend that seeks to reduce all democratic politics to gestures of this sort, and to understand voting as an ‘expressive’ act in which what matters is not who wins but that you have had an opportunity to feel good about yourself by making your mark. If democracy is not about who wins then it’s not about anything. One reason to vote for a candidate who is going to lose is to send a practical signal that there is something to build on for the future. If you go down to the beach and find only one other person there ready to lift the lifeboat, you’ve still got a reason to stick around. When word gets out that two people showed up, it makes it more likely that others will show up next time, and one day you might get to six. One reason to vote for Obama in Utah is to make it clear that the Democrats could win the state one day if enough people did the same.

Tuck’s threshold argument is compelling but it skirts around a significant fact about real-world elections that I highlighted earlier: although in theory it only requires one vote to take someone over the top, in practice, the closer you get to that threshold the harder it is to find it, as the mist of political enmity descends. One way to address this is provided by Tuck’s account of other cases where the threshold seems to disappear the closer you get to it. This happens when the borderline between two states of affairs is unavoidably vague, even though the process of change is cumulative. Baldness is a classic example. I go bald by losing my hair one strand at a time, but the loss of no one strand is enough in itself to move me from the category of non-bald to bald. So if I consider the loss of my hair on a strand by strand basis, I can’t go bald, not even if I lose it all. The same kind of reasoning can also apply the other way, say to fatness. No single éclair is ever going to make me fat, so I might as well eat this one. But if no single éclair will ever make me fat then, having eaten one yesterday, I might as well eat another one today, and so on, until I become the thing that one éclair at a time isn’t supposed to make me: fat. These are known as ‘sorites’ paradoxes (the ‘sorites’ being a ‘heap’ of the kind that ought never to arise if you add to it one grain of wheat at a time). It is not easy to say how they should be resolved. But Tuck shows that the best way to think about these puzzles is to consider them as not that different from the problem of voting.

With voting, we know that there is a threshold which marks off the winner from the loser. In the case of baldness, we will never find that threshold, because the closer we look, the fuzzier things get; in that sense, baldness is something that can be appreciated only from a distance. But that doesn’t mean we shouldn’t treat baldness as though it were marked out by a threshold, while accepting that we can never discover it for sure. This, Tuck shows, is consistent both with the logic of the problem and with our instincts. The logic is complicated, but our instincts are pretty clear. If a ship’s captain wants to know a safe distance at which to sail past some rocks, he needs to assume that there is some point at which it becomes unsafe. He can also draw some fixed lines around what is and is not safe – two miles out is clearly safe, two yards out is not. What he cannot do is say where the cut-off point is, which means that each time he sails past the rocks he may make a slightly different judgment about how close to go (just as we can make slightly different judgments about whether or not someone is bald, depending on our mood). The captain will want to err on the safe side, but his judgment of where the safe side is will vary. The fact that he can’t pinpoint the threshold doesn’t make it rational to act as though there were no threshold – if he does that, the boat will hit the rocks. And if this is true for baldness and sailors then it is true for collective action as well. Even if you can’t find the threshold – because it’s a question of the size of the crowd, or the weight of public opinion – it still makes sense to act as though it was there somewhere. Why join the march or sign the petition? Because your contribution is crucial to making sure the threshold is passed, even if the judgment of whether it has been passed will vary from day to day.

Real-world elections are more like sailing past dangerous rocks than Tuck allows. There is a threshold there, but the judgment of whether or not it has been passed can vary from election to election, even if the actual number of votes cast is the same. It might, for example, depend on who is sitting on the Supreme Court. Tuck notes that the phrase ‘the straw that broke the camel’s back’ is often used as though it were an illustration of the sorites paradox, when in fact it is a clear case of a threshold event. If we had a sensitive enough weighing machine, and a docile enough camel, we could find the straw that finally tipped the balance. Likewise, if we had enough time and patience (and a relatively foolproof voting method) we could count every vote cast in an election and discover the true result. But we don’t have those things, and in any election of any significance we never will, because there is too much at stake. With the bald man, the camel and the election, we have to act as though there were a threshold even if we can never be sure exactly where it is. But the crucial point is that it makes sense to treat them all as threshold events, and therefore as events in which individual contributions really do count. Tuck thinks we can assume the rationality of collective action given the existence of thresholds, and work from there. In making this claim, he is reversing the central thrust of political science since Olson, which started from the irrationality of the man with the bucket in the flood.

The difference between these two perspectives is enormous. For Tuck, voting makes sense in terms of the contributions of individual voters, and so is something that it makes sense for individuals to do. In a way, we ought to know this already, just as we ought to know that if we eat too many éclairs we will get fat. Of course we can tell ourselves the story about no one éclair making the difference in order to give ourselves an excuse for indulgence, but it would be hard to find anyone who thinks that this sort of self-justification is rational behaviour. Something similar applies to procrastination. You can always tell yourself that it doesn’t matter if you put off a piece of work until tomorrow, but do you really think that this is a rational way to carry on, given the obvious risks, and given the crucial importance of erring on the side of caution? Yet a generation of political thinkers have committed themselves to the view that this is the rational way to think about participation in group activities, and that therefore co-operation is inherently irrational. For Tuck, the question that follows is why anyone would think like this.

In the second half of Free Riding, he provides a compelling answer by locating the free rider problem in its historical context. He shows that the assumption that it really is a problem is much more recent than we might think. Contemporary economists and political scientists often take it for granted that anyone who views human beings as essentially self-interested creatures will inevitably conclude that groups are vulnerable to the defection of individual members who see that they can free ride off the contributions of others. But Tuck shows that before the 20th century philosophers who saw human behaviour in self-interested terms did not conclude this at all. Instead, they took it for granted that individuals will have good reason to co-operate in most circumstances, because it is obvious that the benefits of the group for the individual depend on the contribution of the individual to the group. This was the view, for instance, of David Hume, Adam Smith, Jeremy Bentham and all the utilitarians who followed them. Of course, they did not think that the rationality of collective behaviour meant that this was the way human beings were bound to behave, because they knew that people were often deeply irrational, preferring short-term interests to long-term ones, and immediate gratifications to sensible courses of action (hence the tendency of many human beings to get fat). Equally, they did not assume that the rationality of co-operative behaviour meant that such behaviour was always a good thing for society as a whole. It very much depended on what the group was for: just because it makes sense to collaborate in an act of organised crime does not mean that the victims of the crime should welcome this. But the classical utilitarians would have thought it very odd to imagine that co-operative behaviour was irrational simply because its consequences were not always desirable, or because individuals could tell themselves self-serving stories in an attempt to talk themselves out of it. It is rational to co-operate because your individual contribution causes the benefit you hope to get from the collective endeavour. Tuck shows that you don’t need to overlay this basic truth with additional moral strictures about the need to do your duty by other people – large-scale group activity does not depend on the Kantian imperative to do as you would be done by. If it did, it would be much more precarious than it in fact is.

That co-operative activity is not especially precarious was also something that struck the late 19th and early 20th-century founders of modern economics. Alfred Marshall, Francis Edgeworth and Vilfredo Pareto all recognised that ‘combinations’ of both capitalists and workers – ranging from cartels on the one side to trade unions on the other – were the likeliest outcome of the struggle for competitive advantage. Large-scale groups could regulate the market in ways that individuals could not, which was a reason for individuals to belong to large groups. It was only from the 1930s onwards that the opposite conclusion was drawn from the same set of facts: if individual contributions were negligible in relation to large-scale collective endeavours, it made sense for individuals to free ride off the collective, since their contribution would not be missed. This became the modern doctrine of perfect competition, which states that because small-scale producers can make no impression on the market price by raising or lowering their own level of production, no ‘combination’ of such producers to fix the price will hold together in the long run. Individual producers will always be able to free ride off the group (i.e. by producing more than an agreed limit in order to maximise profits), and when enough individuals do that, the group will collapse. Other things being equal, cartels and trade unions should disintegrate under the pressure of the rational expectations of their individual members. The classic example of perfect competition was the same one that Olson had in mind: farmers in the American grain market.

Tuck draws two broad conclusions from this shift in the understanding of the logic of collective action. The first is that as the idea of free riding escaped from economics and started to colonise political science after the Second World War, it initiated a steady erosion of confidence in the efficacy of democratic participation, which is now reflected in ever declining levels of voter turn-out. This is not entirely plausible. Voter turn-out has declined most strikingly in the past couple of decades, which doesn’t really coincide with a general permeation of free rider arguments in the public consciousness (even if you believe that academic ideas take a while to filter through). It’s more likely that the decline in turn-out has coincided with an increasing scepticism on the part of the public about what their governments are for, and what they are capable of achieving, in the face of international markets. This would fit with Tuck’s overall argument: we instinctively know that our individual votes are worth something, but we are starting to have some doubts about what general elections can achieve, given the saminess of the candidates. In these circumstances, it might make sense to stay at home, notwithstanding the fact that your vote is needed. Obama v. McCain might do something to reverse this trend, but I doubt it will do much.

Tuck’s other claim is more persuasive. He argues that the move to the idea of perfect competition, and hence to the free rider problem, was a product of its time. In the 1930s global politics was dominated by defection from international agreements and general double-dealing. At the same time, Western capitalists, whose entire system was tottering, were hungry for some intellectual ballast to set against the claims of the planned socialist economies of the East.

The doctrine of perfect competition provided what looked like a good reason to think that capitalism was more flexible than its critics had claimed, and as the planned economies eventually revealed their own internal contradictions, the doctrine stuck. But this conception of perfect competition also required a certain historical forgetfulness. At the turn of the 20th century, the US government attempted to confront the monopolies and cartels that dominated American economic life. It was widely assumed that anti-trust legislation was needed precisely because without strong government action rational behaviour would inevitably tend towards large-scale attempts to fix the market. This was certainly the view of late 19th-century economists like Edgeworth, who saw, as Tuck puts it, that ‘by itself, competition would simply degenerate into a war of combinations, and political intervention of some kind would be required to secure a utilitarian outcome from market behaviour.’ But the success of trust-busting in the early 20th century made it easy to forget that lesson, and to assume that government was simply ironing out some of the irrationalities of the market and restoring it to its natural function. If it is assumed that monopolistic or oligopolistic behaviour is inherently irrational, then government intervention becomes little more than a steadying paternal hand on the shoulder. But if it is assumed that co-operative action is rational, and defection is the anomaly, then modern competitive economies will need to operate against a permanent background of threatened state intervention, through which collective actions of certain kinds will be prevented or punished. This is Tuck’s view, and he concludes that, seen in proper historical perspective, the modern idea of perfect competition is a ‘fantasy’.

Free Riding is not an easy book, and it is written in a close academic style that may put off some readers. But it is emphatically not just an academic treatment of politics. If anything, it is the reverse: a defence of politics against the prevalent academic view that reduces it to a faintly absurd, non-natural, marketised activity. Tuck’s account of politics is probably closest to that of Rousseau, who saw political life as a quintessentially collective endeavour, in which the claims of the state as a vehicle of human co-operation had to be asserted against the claims of other more partial groups, which would otherwise distort our co-operative impulses to their own ends. Rousseau would also have thought that the idea that it was possible to rely on the free riding of individuals to confront the power of corporate interests was a fantasy. There is, after all, something incoherent about a view that sees free riders as both the product of group activity and the means of taking on malign groups. If individual contributions really are negligible, then it will need more than individual contributions to bring down the monopolists: it will take the state, which will have to rely on those contributions to achieve its purposes.

Tuck doesn’t try to suggest that politics is an easy business, any more than Rousseau does. It’s a battle against the irrationality and short-termism of individuals as well as against the entrenched power of corporations. Nor does he think it is immune from free rider difficulties round the edges: the threshold argument gives people good reasons to get co-operative projects off the ground, but when they are up and running there will always be some who think the threshold is secure, and bail out. Universal compliance in the achievement of collective goods is as much a fantasy as perfect competition. Nevertheless, Tuck puts this problem where it belongs, at the fringes of political activity, and not where it has been for a generation or more, at the centre. The central questions of contemporary politics are, as they have always been, when, where and how to use the power of the state to achieve the best outcomes for the individuals who give states their power. If international markets are preventing states from achieving these outcomes, that is not a reason to give in to the market. It is a reason to find some new ways of doing politics. If you want to know why it’s worth bothering to vote, this book has an answer: it’s because your vote is what counts, and in the end politics is also what counts.

Wreckage of UK Economic Policy

What can Cameron do?
Ross McKibbin

LRB 23 October 2008

In 1931, as the European banking system seemed to be collapsing, the Austrian economist Joseph Schumpeter observed that people felt the ground giving way beneath them, and not merely those with bank accounts. Many in Britain and America must be experiencing similar tremors now. Yet, in Britain at least, there are huge differences between 1931 and today. The 1931 crisis had profound political consequences – it almost wrecked the Labour Party and established the extraordinary hegemony of Stanley Baldwin, Neville Chamberlain and the Conservative Party – but it was a balance-of-payments crisis that was resolved the moment Britain went off the gold standard and devalued the pound. Almost uniquely among major economies, Britain didn’t experience a run on the banks or a threat to people’s savings. No high street bank collapsed or was likely to. In so far as there was a nervous shifting of money it was from the banks to the building societies, whose golden age it introduced.

The stability of 1931 was based on large, conservative institutions – the Midland Bank (now HSBC) was the biggest bank in the world. Unlike so many of the American banks which collapsed, British banks were not dependent on the savings of rural and small-town communities (whose incomes had begun to fall even before Wall Street ‘crashed’). Nor, unlike the great German banks, were they large investors in perilously unprofitable industries. They were cautious organisations run by cautious men. The building societies were exactly that, societies for building: building houses in local communities to which many were tied. Nearly all were ‘mutual’: ‘owned’ by their depositors, they were products, like the co-operative societies, of the 19th-century tradition of financial mutuality. They were not investment or commercial banks; and did not want to be.

Again, the London Stock Exchange, unlike Wall Street, wasn’t a site of crazy speculation. There was less loose money sloshing around with no other profitable outlet; a stiff tax was levied on all Stock Exchange transactions; and the culture was different. The members of the predominantly Conservative governments of the 1930s were not wholehearted admirers of the City. They imposed exchange controls on capital exports and they believed in a ‘managed’ currency. This reduced the authority of the City banks that had been so influential in the 1920s and before the First World War. Free trade was abandoned: Britain became a protected and cartelised economy. These governments were often suspicious of the state and believed in balanced budgets, but even so they nationalised mining royalties, brought the national grid under public control and established Imperial Airways (the distant precursor of BA) as a state monopoly. They believed in capitalism as a system of private ownership, a system of social and economic virtue, but not in the piratical capitalism of the United States. The Conservative Party of the 1940s was not seriously hostile to the nationalisation of the mines and railways, or of the Bank of England.

How things have changed. That kind of Conservatism is (or was) one with Nineveh and Tyre. We are faced with the possibility of a Conservative government in less than two years’ time led by men who have hitherto represented the purest form of freebooter capitalism. Despite a couple of brazen attempts by George Osborne to pretend that the banking crisis has nothing to do with them, all its ingredients, to the extent that they are home-grown, were cooked up by the Tory Party – mostly under Thatcher. The first was the abolition of exchange controls, which had the effect of strengthening the City and its institutions at the expense of other sections of the economy, as well as permitting the uninhibited export of capital regardless of what it did to British economic and financial systems. The second was to allow the value of the pound to rise considerably, rendering much of British manufacturing uncompetitive. This led not only to the elimination of hundreds of thousands of jobs but to a ‘rebalancing’ of the economy in favour of the financial and service sectors – which the country’s elites convinced themselves was the way of the future. It also had long-term consequences for the current account that were hardly less damaging. The third was the ‘Big Bang’ and the process by which the City and the banking system were effectively deregulated.

If you wanted a ‘competitive’ and risk-happy City, as the Conservative government did, then getting rid of all the understandings and conventions that regulated the old City was entirely proper. The Big Bang undoubtedly reinforced the City’s international standing; but it encouraged ecstatic risk-taking everywhere – often via financial devices themselves intended to spread risk. It also encouraged, as in 1920s America, huge inflows of loose money that were hard to control and were usually seeking speculative returns. The Big Bang initiated the process by which the old merchant banks, still largely home-owned, passed into foreign ownership or simply disappeared. The result, whatever the intention, has been to make the British largely (and almost uniquely) indifferent both to who owns the country’s assets and to the purpose for which they are owned. (Since these assets had to be sold to cover ever widening current account deficits this is probably a mere quibble.) The inevitable accompaniment to the Big Bang was the deregulatory legislation of the 1990s which, among other things, allowed the mutual building societies to ‘demutualise’ and become banks.

Finally, and most important, the Conservative governments began the politicisation of British housing and its manipulation for electoral reasons. The desirability of owning one’s house has a long history in all English-speaking countries and there are good social arguments for private ownership. But there is a thin line between social desirability and political calculation, and Thatcher crossed it with complete insouciance. The mandatory sale of council housing was pushed through not for social reasons (though many defended it on those grounds) but as a way of re-engineering the electorate. When Conservatives spoke, as they often did, of a ‘property-owning democracy’, what they had in mind was an owner-occupying, Tory-voting democracy. Thus the councils whose houses were compulsorily sold were not allowed to spend the proceeds on new social housing, since that would create more Labour voters. New housing was almost always privately built – i.e. rationed. Since demand could never be met, owner-occupiers achieved an effortless rise in asset-wealth and privately built housing was increasingly used as security for consumption on credit. Again, that was its purpose. Although the rhetoric of Thatcherism was ‘productionist’ – thrift, hard work and so on – what it actually stood for was private consumption.

The housing boom of the late 1980s, ending, as it was bound to do, in the recession of 1990-91, eventually did for the Conservative government. In their criticisms of Labour’s ‘credit bubble’, Cameron and Osborne are right only to the extent that Labour further refined the politicisation of housing and carried it to its logical electoral conclusion. But there is no evidence that the Tories would have acted differently. Labour didn’t invent the credit bubble.

The banking crisis has understandably caught the Conservatives on the hop, and Cameron’s responses have been pretty incoherent. Much of what he recommended with confidence even a few weeks ago now sounds dated – as he knows. Fundamentally, he is trying to adjust Thatcherism to inappropriate political and economic circumstances. Thus he wants light regulation; he is opposed to forced nationalisation of financial institutions; he wishes somehow or other to cut taxes; he still believes in the overriding efficacy of the market as against the state; he is a man whose sympathies lie wholly with finance and financial institutions – probably inevitable in someone whose experience of life outside Parliament was a brief stint in a PR firm. He has, however, committed the Conservative Party to Labour’s current spending plans; he has reluctantly admitted that nationalisation of banks could be defensible (the sight of savers struggling to open accounts in Northern Rock must have shaken the faith of every committed free-marketeer); he has conceded that taxes might have to rise given the ‘mess’ his party will certainly inherit. In other words, he is all at sea. The banking crisis has undermined the whole edifice of Tory policy, which was founded on high levels of public expenditure plus a deregulated economy – i.e. exactly the same assumptions as New Labour’s, but tweaked in an even more free-marketish way.

The events of the last few days, however, have driven him far from free-market triumphalism. In fact, he has had little option but to support the public recapitalisation of the banks. The banks themselves want it and nothing else seems likely to restore the money markets or the mental balance of increasingly irrational stock traders. He has done this with reasonable aplomb; even trying to snatch some moral credit by appearing as the scourge of the money-lenders; something the City probably won’t forget. But we don’t know whether this is merely a tactical switch – to be abandoned when the good times return – or an expression of genuine doubt about his political inheritance.

In either case Cameron needs to accept that Thatcherite Conservatism is not the only form of Conservatism, and doesn’t have a unique political legitimacy. What is the function of the Conservative Party? It is to defend inequality: to make acceptable the social and economic unfairness inherent in a predominantly capitalist economy; to preserve the interests and privileges of social elites. But historically it has not been committed to a particular strategy to fulfil these aims. Thatcher appears to have thought that she was the first ‘proper’ Tory prime minister since Chamberlain. But Chamberlain was not a proto-Thatcherite, and the predominant Conservatism of the last thirty years has been unlike any other in the history of the party. As its behaviour in the 1930s suggests, the party has always been prepared to allow an active role to the state if circumstances required. It has not always given primacy to the unfettered market: indeed, it has hardly ever done so. And it hasn’t always been the party of banking and finance – and to the extent that it has been, it was in its role as the party of property rather than of finance. In the past, powerful forces within the party have aimed to divorce it from finance. Joseph Chamberlain’s campaign for protection before the First World War had precisely this intention; by 1914 the protectionists had won control of the party – and they kept it in the interwar years. Baldwin and Neville Chamberlain were products of that campaign. In Chamberlain’s case it simply ran in the family.

The Tories have had recourse to many specious slogans in the defence of inequality. One was ‘fairness’. Believing that Conservatism actually stood for fairness was doubtless naive on the electorate’s part, but it wasn’t wholly absurd. Until recently the party was reluctant to be seen sanctioning displays of conspicuous unearned wealth, but the difficulty with the economics it has espoused in the last thirty years is that unfairness and the display of conspicuous unearned wealth are intrinsic to it. That is its point. And this is what landed the party in so much trouble in the 1990s. There are no doubt many explanations for the debacle of 1997, but the deliberate abandonment of ‘fairness’ and the open cultivation of unearned wealth was one. For a time Cameron could get away with being in a muddle. That he is not Labour is his strong suit, just as not being Conservative was Blair’s in 1997. But as he gets closer to the election and, even more, if he wins it, muddle will become increasingly disabling. The policies to which he is naturally drawn will almost certainly be discredited and in any case won’t work. If, on the other hand, he comes to see that the party has other traditions, less heretical than neo-Thatcherism, he is unlikely to lose support among the electorate or his own party membership. If he doesn’t, he risks either losing the next election or leading a government even more unsuccessful than the present one.

Events of the last year or so – certainly since the run on Northern Rock – have imposed several almost inescapable obligations on any responsible government. The first is the restoration of the regulatory systems that were set up in most Western countries just before or just after the Second World War. Everything suggests that light regulation or self-regulation of financial institutions never works. In the General Theory, Keynes said he expected the state increasingly to determine the patterns of investment because the state, unlike everyone else, can take the long view. Keynes went further than we would want to go, but it is surely correct that among economic actors the state is best placed to arbitrate between differing and often antithetical economic interests and best able to regulate financial systems dominated by short-term decisions. What has happened in Britain and America is that the state has abdicated its responsibilities to such agents as the Financial Services Authority, whose regulatory touch has indeed been light. The question is how much of the regulatory regime can be re-established. Demutualised mortgage lenders can be remutualised only with difficulty, but they should at least be subject to adequate regulation, whether by the Bank of England or the FSA. Even if it is unlikely that the present political class will entirely restore the credit discipline of the 1950s, when governments controlled access to credit by fiat, something like it seems unavoidable.

The second inescapable obligation is the return of housing to its proper function: as providing places to live in rather than to speculate on. The relationship of housing to politics in both Britain and the United States is not fully understood even by those who transformed it. They don’t understand it because that would require confronting awkward facts about Anglo-American democracy. Fundamentally, private housing has become a compensation for the increasingly gross maldistribution of income. Inadequate incomes mean that large numbers of people don’t have access to the style of life that has always been the ultimate justification of neoliberalism and to which, reasonably enough, they now believe they have a right. What does give them access to it (in the short term) is credit. But credit has to be secured, and that’s what housing does. However, it works only if house prices keep rising and people have enough income to repay debt. When prices stop going up and people can no longer repay what they owe, the financial system begins to disintegrate. This is what has happened; and it has happened because we have replaced something like social democracy with credit democracy, or universal access to credit, and credit is a thoroughly inadequate substitute because sooner or later it has to be repaid. Which means that people’s incomes have to be sufficient to repay it, and in many cases they aren’t. What we have put in place is a dynamically destructive cycle. The number of houses is rationed in order to force up prices; people buy houses in order to secure credit on the strength of those prices; this encourages a heady belief in perpetual profit and thus both risky lending and risky borrowing; this renders the banking system unstable; and lending both to individuals and among banks then collapses. Such a cycle involves a paradox. Since these credit democracies still hold elections, governments are forced to underwrite savers at the expense of creditors and stockholders. And if savers are also small shareholders, as many are, the price they pay for protecting their deposits is the devaluation of their shares. This is absolutely not what was originally intended. The rationing of house building has one other consequence: it means that many cannot acquire somewhere adequate to live.

As a way out of this, stricter regulation, though necessary, is not enough. Governments must restore house building to something like postwar levels. When Richard Crossman was housing minister in the 1960s, some 400,000 houses were built every year, most of them council houses. In the last few years the number has scarcely exceeded 150,000. This year it is unlikely to reach half that level, and little of it will be social housing. Increased house-building programmes would both stop the development of credit bubbles based on artificially inflated house values and would have a ‘public works’ effect as an expansionary mechanism should the economy go into serious recession. The housing market obviously has to be restored – some want to sell and others want to buy – but not on the pattern of the last thiry years.

Governments must also reduce the demand for private credit. Since it is unlikely that people will lower their lifestyle expectations very much, and since falling house prices diminish their value as security, the only way demand for credit can be reduced is by increasing the income of those who want it. That is something any British government would hate to do because it involves redistribution, which in turn involves the taxation of high incomes. But if there isn’t to be some form of income redistribution, we will be back on the same old treadmill.

British governments, of whatever party, should also think carefully about our relationship with the United States. It is largely one-sided, has been very damaging and has left the political class in a world of illusions, a world where above-weight-punching is thought indispensable. Gordon Brown has been careful to emphasise that the banking crisis had its origins in the US. In one sense that is self-evident: almost any crisis in American banking is going to be a crisis in Europe. But it is an error to assume that the lending and borrowing practices of the demutualised societies in Britain, or Brown’s role in encouraging those practices, were immaterial. The run on Northern Rock was, after all, the first and so far the only serious run on any bank anywhere. Equally immaterial, Brown would like us to think, is his own profound admiration for the economic and financial system of the United States. Although our own bankers hardly needed it as a model, it has been New Labour’s model, whether Brown admits it or not, as it has been the Conservatives’. If the crisis induces the government to increase its distance from the United States and display greater scepticism as to its financial and economic virtues, that is only to the good. But it will be difficult for New Labour, since the ideological superiority of the US over ‘Europe’ has been central to its formation. And it will be even more difficult for the Conservatives. If anything, their illusions are stronger, heightened by the party’s infantile and dangerous Europhobia. It has been under Cameron (who must surely know better) that the Conservatives have threatened to withdraw from the Christian Democratic grouping in the European Parliament and join the ratbags of the extreme right. Cameron might still be the favourite to win the next election, but the last few weeks, to the extent that they have forced disagreeable choices and unpalatable facts on him, have tested him more than anyone else.

9 October 2008

Ross McKibbin is a fellow of St John’s College, Oxford, and the author of Classes and Cultures: England 1918-51 and The Evolution of the Labour Party: 1910-24.