Decentralism and the EU

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Yesterday’s post about the EU and structural funding actually goes to the heart of one of the issues which I’ve always found hardest in terms of political philosophy.  It also relates to one of the issues which Plaid Cymru has found difficult for decades, and never really got to grips with, as the recent report of the party’s review identified.

What exactly is decentralised socialism?  It’s not that there aren’t definitions around, of course there are.  It’s more that, in some ways, the two concepts (decentralism and socialism) don’t always mesh together very well.  And the reason that I’ve found it difficult is that I consider myself to be both a socialist and a decentralist, and whilst it’s comparatively easy to support both positions in theory, it can be difficult when it comes to specifics.

As a result, to an extent, those of us who advocate decentralist socialism have got away with it for years without really having to put the flesh on the bones.  Plaid’s review has recommended doing some work on that – I look forward to seeing it, but suspect that it will be easier to recommend than to achieve.

I remember Phil Williams once saying that decentralised socialism is an oxymoron – socialism requires by its nature a strong central authority to ensure redistribution and fairness.  It doesn’t stop at European level either; how are we to achieve global fairness in access to the earth’s resources without strong global institutions?

That need for a strong central redistributive policy is really the reason for supporting the continuation of EU structural funding.  It doesn’t make the EU a socialist organisation; far from it.  But it’s hard to see how a fully decentralist model works to enable fairness without such supranational structures.  And that creates a dichotomy.

The question thrown at myself and others over the years – how can you argue for both devolution and the EU; you’re just swapping one remote central government for an even more remote one – is far from being an unfair one.  The answer depends less on what the institutions are than on what powers we cede to each of them.

The problem is that to get where I want to go, I wouldn’t really start from where we are, but if change isn’t going to be sudden and revolutionary, then it is going to be slow and evolutionary, based on where we are now.

In practice, support for devolution to and within a Wales which enjoys full membership of the EU is something of a compromise, and I recognise that.  But it’s a compromise which represents progress from where we are now.

Winners and losers

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Yesterday’s report about Jack Straw’s little faux-pas echoes the report from last Friday about Wales’ contributions to, and receipts from, the EU.  Last week’s headline suggests that Wales pays more into EU structural funds than it gets back and is thus getting a bad deal; Straw’s case yesterday was that the UK is getting a bad deal.

Superficially, Jack Straw has a point.  If the UK did not contribute to the EU’s structural funds, the UK would have more money to spend on regional assistance within the UK.  I can’t argue with that; but it isn’t that simple.

The first complication is that the fact that the UK Government ‘could’ do something doesn’t mean that it ‘would’ do something.  ‘Regional’ assistance policy has been inconsistent at best within the UK over the decades, and I think we can be forgiven for suspecting that the UK Government might simply trouser the cash and use it to fund tax cuts, or wars, or whatever.  There’s absolutely no guarantee that we’d see any of it, which is the basis of much of the argument against what Straw said.

That raises another issue, though.  Is the fact that we might trust one government – the EU – more than another – the UK – really the best way to decide where regional policy should be made?  I don’t think it can be or should be.  It isn’t radically different from the argument put forward by some anti-devolutionists – they trust the UK government more than the Welsh one and therefore want power to remain there.  If we’re consistent, we should surely separate the issue of where policy is made from the substance of that policy.  We need a better reason than distrust of London to want the decisions to be made in Brussels.

Nor is it good enough to decide whether participation in the EU structural funds is worthwhile on the basis of a simple comparison of how much we put in and how much we get back.  On that basis, only the poorest countries would want to contribute – but there’d be nothing left for them to withdraw.  And that’s ultimately the whole point of the EU structural funds – the most well-off put in more and the least well-off get more back.

It’s fundamentally a question of whether we support redistribution or not – looking at it in terms of what we get is a much narrower viewpoint.  We tend to forget sometimes that the UK is one of the wealthiest countries in the UK; it is inevitable that the UK will therefore be a big net contributor. 

The problem for Wales is that we’re a poor region within a wealthy state.  We only get Convergence Funding (like Objective One funding before it) because of some creative work drawing a line across Wales in order to invent a region which didn’t exist before, and which exists for no other purpose than to qualify for the funding.

That shows the complexity of the issue of redistributive policies – drawing the right lines in the right places (and not necessarily following accepted regional or national boundaries) can make a huge difference to the perception of wealth and poverty without making any difference whatsoever to the actual wealth or poverty of the people affected.

There was one other point raised by the Open Europe report which has received little attention.  That is the extent to which the whole process is managed efficiently and effectively, and whether the same amount of funding could deliver more effect on the periphery with less bureaucracy at the centre.  I think that they have a point there; I just don’t agree that dismantling the whole policy is the best way of resolving it.

Muddled thinking

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There are signs of some muddled thinking in this report today.  The report notes that the number of English students applying to study in Wales has dropped, and the usual suspects proceed to provide the customary quotes.

The Conservatives' Education spokesperson wins the prize for squeezing the most clichéd phrases (and the most hyphenated ones too) into the shortest space (‘headline-grabbing’, ‘wafer-thin’, ‘half-baked’ and ‘wake-up call’, all crammed into two sentences).  Stripped of rhetoric however, her point seems to be that the policy is wrong because it’s going to cost more than planned.

In fairness to the Government, they have admitted previously that the costings for the policy were based on estimates.  Indeed, they had to be estimates.  No-one could have known in advance what the level of applications was going to be; apart from any other factor, this was the first year with the new higher fees level – no-one really knew what the effect of that would be on applications.

We shouldn’t castigate governments for proceeding on the basis of estimates rather than hard figures, which seems to be part of the Tories’ pitch.  All governments do it; very little would happen if they did not.  If the estimate could and should have been closer to the out-turn, then there is a potential criticism of incompetence, which is rather a different matter.  But from my reading of the figures, it seems to me that the government took a reasonable and reasoned view in arriving at its numbers.

The question is what happens next.  The Tories’ position seems to be that the policy should be abandoned because it costs more than planned.  That sounds rather like a way of trying to sink it on practical grounds rather than arguing with the principle, which is what they really dislike but are afraid to say.

Clearly, it will be challenging for the government to find what looks like significant extra funding for the policy, but having taken the bold decision to go down this route, it would be an enormous shame if they decided to change tack at this stage, quite apart from the impact on the financial planning of students. 

One thing which does deserve more attention, though, is the comparison between Wales and Scotland when it comes to the numbers of students choosing to stay here to study.  There are many factors involved in this, but the difference is nevertheless stark. 

One of the advantages of the previous policy, before it was abandoned by the One Wales Government, was that there were signs of an increase in the number of ‘stay-in-Wales’ students.  Encouraging that trend wouldn’t solve the financial problems, but it would help to direct the expenditure into Welsh universities.  There’s scope for some tweaking of policy, but it doesn’t need to be abandoned.

Top salaries

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There have been two main arguments advanced by those who support the payment of massive bonuses to bankers.  The first is that such bonuses represent payment for results, and the second is that the banks are in competition with each other for their top management and therefore have to pay competitive packages.

Those arguments are, however, based on two assumptions.  Those assumptions are self-evidently true to those making them; but I’m not convinced that they stand up to more objective scrutiny.  The first assumption is that the actions of the individuals concerned make such a significant difference to the performance of the organisation as a whole that it is essential to retain them, and the second is that there is a vanishingly small pool of talented people who can undertake such roles.

The question about the extent to which the performance of an organisation is affected by the performance of an individual is far from straightforward.  It’s probably true that poor decisions by individuals can wreck an organisation – and the banking industry has seen the effects of that probably more than any other sector.  It’s far less obvious that the actions of top management can make an organisation succeed. 

That doesn’t stop them claiming the credit for success when it happens – but there’s often a huge amount of luck.  They just happen to be in the right place at the right time.  And if things go wrong, there’s usually someone else to blame.  So when things are going badly it’s down to the problems of the Eurozone; when they are going well it’s due to the brilliance of the top bankers.  (And it’s hard for politicians to criticise bankers for pulling this trick when they do it so often themselves.)

Competent management teams at banks will generally do better than incompetent ones, but I suspect that a huge proportion of the factors which affect overall success will always be outside their control.  If that’s true, then the pool of people who could manage a bank competently is much larger than we are led to believe.  And if that pool is much larger, then the need to compete by paying huge salaries is correspondingly reduced.

To look at things another way, do we really believe that we couldn’t find competent people to run our banks at salaries very much lower than those being paid currently?  After all, it’s not so very long ago that the banks were indeed run by people whose salaries, in both absolute and comparative terms, were very much lower than today.  And the banks were, I recall, rather more successful too.

Only the rich need apply

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It appears that some in government circles are starting to feel a little disappointed that most of the names emerging for the elections to the new posts of Police Commissioners are past or present party politicians.  Apparently, they had really hoped to see some strong independent characters coming forward, rather than simply having a traditional party battle.

I can understand that hope – after all, possible politicisation of the police is one of the main planks of opposition to their proposals.  But I cannot understand why they might have thought for a moment that there would ever be a significant number of non-aligned candidates.

Elections are the business of parties; parties are structured and organised precisely for that purpose.  They are also funded for that purpose.  And the areas covered by police forces are large, much larger than the average constituency; the chances of a one-person band ever communicating effectively with a significant proportion of the population are slim.

Why would anyone think that there would be many independent candidates who would be able to organise an election campaign over such a large area on anything like the same basis as a political party?  And how would they fund it – unless they are significantly wealthy in the first place?  I cannot imagine how anyone involved in politics could ever have expected the elections not to be dominated by party political candidates.

Friends like these...

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I’ve long-known that politics is a business in which friendship and loyalty count for little, but I was still surprised at the candour of Peter Hain’s description of the events surrounding the replacement of Ron Davies as Labour’s candidate for First Secretary.

Hain was completely convinced, he tells us, that Rhodri Morgan was the right man for the job; right for Wales and right for Labour.  However, instead of supporting Rhodri, he ran Alun Michael’s successful campaign.  He did this, he says, because Alastair Campbell told him that it was ‘what Tony wanted’.

Perhaps Hain expects Rhodri, Labour, and Wales to forgive him, now that he’s been so candid - the repentance of a sinner, as it were.  I suspect that it will just make his ‘friends’ – if he has any left – even more wary about their backs.  With friends like Hain, they hardly need political enemies.

What is to be done?

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I quite enjoyed David Davies’ little outburst yesterday about the likely outcome from the Silk Commission.  It’s a real problem, isn't it, when opinion is moving so strongly in one direction that it becomes difficult to find anyone willing to put the opposing case.

I suspect that his suggestion – just publish the report now, and scrap the consultation and evidence taking – was born of frustration and intended to be sarcastic.  But what would he have people do?  Ban most of those supporting further powers from giving evidence so that the committee only hears an equal number of fors and againsts?  Fund some new groups to argue against to try and even the numbers out a bit?

In fact, his tongue-in-cheek suggestion may well be the best and most sensible one, even if he’s likely to be the last one to recognise that.  On those issues where there is an overwhelming consensus, perhaps moving straight to a recommendation and decision really is the easiest way to proceed.  After all, the only reason for holding long drawn-out commissions to consider matters is to appease the vociferous minority who want to stop progress.  People rather like David Davies, in fact.

Somebody must do something

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The collapse of Peacocks is a tragedy for all those who work there, and a major blow to the Welsh economy, given that Peacocks is one of the few large companies to be headquartered here.  Whatever happens by way of salvage, it seems inevitable that what emerges will be a smaller and leaner company – with a much reduced workforce.

It isn’t the only company to be facing difficulties of course; many others have already been hit, and we can be certain that more will be hit in the future.  The reaction from opposition politicians (and it really doesn’t matter which party or parties are in government and which in opposition) is that somebody must do something.

The somebody is invariably code for ‘the government’; and given the essential similarity of economic policy of the government and the opposition, the something inevitably means the use of public money, since the differences in economic policy between opposition and government are too small and too long term to make a difference at the point at which a company has failed. 

As an instinctive interventionist, I don’t see anything wrong, in principle, with the use of public funds to rescue private firms and save jobs and livelihoods.  It’s the practice which concerns me, not the principle. 

It is a fundamental tenet of the capitalism whose image the UK parties are all busily trying to burnish that capital gets rewarded for taking risk, and that capital gets the lion’s share of the rewards of success.  The question is over how much risk they’re really taking if public funds are being used for rescues when a capitalist enterprise fails.  It’s another example of privatised rewards and socialised risk.  And it often looks as though the biggest risks of all are borne by those who have little choice but to work for a capitalist enterprise.

The danger in using public money to bail out private companies is that governments are usually asked to step in only after the banks have already decided that the risk of default is too great for them to loan the money.  I’m not sure on what basis anyone believes that governments are better placed than banks to predict the success or failure of an enterprise; it seems a highly unlikely proposition to me.

Perhaps rather than lending or giving money direct to the companies to bail them out, the government might think about lending or giving it to the employees for them to take a growing stake in the companies for which they work.  It would not only give them a greater stake in the success of the enterprise, but it would also start to rebalance the economy away from a pure capitalist model.  After all, Marx said that capitalism contains within itself the seeds of its own destruction.  All we need is the mechanism to give effect to that, and the failure of capitalist company after capitalist company might even be creating opportunities if we look for them.

Diverting attention

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The Labour and Conservative leaders seem to be vying with each other to see which can offer the most trenchant critique of the style of modern-day capitalism.  It will never lead to any real action, though.  Once they’ve milked this one for all the sound bites they can get, they’ll just move on to something else. 

And, for all his bluster, Cameron seems either unwilling or unable even to intervene in remuneration decisions at RBS, despite the Government owning 83% of the company.  How serious can he really be about empowering shareholders?

More significantly, an argument about the style of capitalism avoids any discussion about the substance.  With capitalism suffering an enormous crisis, and the dependence on borrowing and growth shown to be unsustainable, it’s not an alternative style that we need, but an alternative model.

Sure, as its supporters regularly trumpet, capitalism has been a huge driver of affluence from which we have all benefited.  Even Marx recognised that.  But the idea that it can or will continue indefinitely owes more to faith than fact.  And to point to the benefits without discussing the disbenefits is to arrive at a very unbalanced conclusion.

Capitalism may well have driven growth and affluence, but it has also driven rising levels of inequality, and by externalising costs in pursuit of private profit has left human society as a whole with the costs of the environmental damage caused by rampant growth and exploitation of natural resources.

Criticising fat cats and boardroom pay may attract media attention, but it’s a diversion form the real issue, which is about how we move from a global competitive economic model to a local co-operative one.  It’s about fairness in allocation of finite resources rather than power and strength.  And it means the sort of changes which Tory-Labour politicians will never propose.

Funding gaps and outrage

Tweet The howls of outrage from those more interested in having a stick with which to beat the government than they are in either statistics or education are hardly a surprise.  The Lib Dems, in particular, have been obsessed for years with the alleged 'funding gap' between schools in Wales and schools in England (although both Plaid and the Tories have been known to join in from time to time as well).

The lack of information this year can hardly have come as a surprise to anyone, however - not if they'd read beyond the headlines last year, at any rate.  Because last year's report (available here) clearly stated:

What happens next year?
If England are able to provide education outturn expenditure for 2010-11 on a comparable basis with the new local authority responsibilities removed then the outturn data could be compared.
The position of comparability of budgets for 2011-12 is not yet clear due to further changes in the way education is funded in England but we will be exploring this with the Department for Communities and Local Government.

I would have hoped that the absence of a meaningless high level comparison of the Welsh average and the English average might lead people to start to concentrate on the substance of the education problems in Wales instead.  Hoped, but not expected.