Friday, April 07, 2006

Krauthammer on Immigration

Charles Krauthammer has written a superb piece for the Washington Post on the immigration debate in the US. His idea is that you combine the hard policy of building a physical barrier on the border of the US and Mexico with the soft policy of an amnesty on integration. This allows you to solve the problem of suffering illegal immigrants without the risk of incentivising future illegal migration. This proposal is of limited practical value to an island nation but does suggest at least the direction of movement; towards a more friendly policy for those already in the country if we can combine that with stronger controls at the border.

A problem is the brief suggestion that amnesty be dependent upon paying back taxes. That would make staying hardest for those who have been in the US longest and hurt the purpose of helping those stuck in the black market for so many years.

The other solution of having immigrants learn English makes more sense in finding those migrants committed to integration. An alternative would be a strong citizenship test such as that being suggested in Germany.

Since this report Merkel has set herself up in favour of it. Some of the questions are strong and clearly aimed at Islamists but should only really offend those that hold them (offending these people isn't a problem). Moderate Muslims should be more than happy that we exclude such extremists and to pretend that such views don't exist is absurd.

The only question which isn't directly targetted at extremists is that about homosexuality (which would catch many peaceable social conservatives who would have no trouble integrating in the UK) but this isn't a problem if the answers are interpreted such that milder, if illiberal, answers like "dissapointed" aren't cause for a red flag. The question is looking for an answer like that suggested by the University of London Union chair recently that he would "shoot a gay son".

While people can always lie having to study around the questions will give any applicant a good view of the values and opinions of the nation before they arrive and, therefore, still serve a purpose in informing their decision over whether to seek citizenship.

Thursday, April 06, 2006

Twelve Books that Changed the World

Martin Goodman notes the selection chosen for the twelve greatest books of all time by Melvyn Bragg. As Martin describes the selection of books chosen is heavy on works which can hardly be considered literature at the expense of the novel. Martin’s choice for a novel to add is Lady Chatterley’s Lover as a book which, through the controversy it created, led to serious social change. He is obviously right that many of the books selected by Bragg have recorded changes which have already happened in the world of technology or the law and therefore form a poor advertisement for the power of the written word.

However, Martin is a writer of dystopian fiction, among other things, and I think that he has neglected to mention the poor showing that genre has made in a write up of the most important books. A Brave New World is unparalleled as a challenge to utilitarianism and is therefore clearly of huge importance in the development of human thought. It also acts as a warning which has been noted far and wide; it recently showed up in the film Garden State as the intellectual underpinning to an otherwise simple movie. 1984 is probably one of the most widely referenced books going which is currently both honoured by frequent name checking whenever someone wishes to defend freedom against autocracy and dishonoured by its new association with popular culture through Big Brother. Both of these books are clearly highly important and important in their own right as artistic and political statements rather than as the record of important activities going on elsewhere. They are a showcase for the written word which would better befit a series about great books than Bragg's series, which is likely to become a record of great 'things'.

Wednesday, April 05, 2006

The Union Modernisation Fund

Guido Fawkes highlights an ongoing concern for anyone worried about how the Labour party seems to be taking maximum electoral advantage from its time in government by every means other than actually running the country well. The Union Modernisation Fund offers £10 million over 3 years to the Unions for the purpose of "modernising". This, fairly vague, term appears to mean buying computers and websites. It is set out clearly on the DTI's documentation for the project that it cannot be used for funding political projects. This is an important distinction because otherwise the money is the Labour party using the Unions as a vehicle to fund itself from tax revenues.

The problem here is that the Unions have a budget restriction that forces them to make choices between, for example, spending more on computers or spending more on political funding for the Labour party. Reducing this pressure by, for example, paying for Amicus to communicate with its branches increases its ability to spread largesse elsewhere. The segregation of Labour funding in a political fund does not change the fact that this political fund's size is limited by the need to prioritise within the budget limitation that is the willingness of union members to sacrifice consumption for union representation. Clearly a Labour government policy is contributing to the same budget that funds the Labour party politically. Clearly Frances Maude is right that is "very, very direct sleaze. That is buying influence and buying taxpayers' money".

The argument that unions which don't fund Labour are also receiving money therefore the scheme is okay is utterly irrelevant. All that means is that Labour has no objection to spreading taxpayer money around so that it funds other unions as a byproduct of enabling those unions who do fund the party to continue to do so. Al Fayed also gave substantial money to his son, does that mean his payments to the Hamilton's were above board?

The Metropolitan Police investigation into this scandal marks another low for this government. With the investigation into the cash for peerages row that makes two policy probes into the Labour party directly that I know of at the moment. Really puts the problems at the end of the Major government into perspective doesn't it?

Monday, April 03, 2006

April Fool's Gold Prize 2006

Google, I believe, win the prize for Best April Fool's joke this year with Google Romance. Previous efforts from the company have been somewhat lacklustre with the faintly comic but lacking social bite or plausibility Pigeon Rank providing the premiere.

Google Romance, on the other hand, is both self effacing with its "Contextual Dating option, thematically appropriate multimedia advertising throughout the entirety of your free date" and incisive with "Post multiple profiles with a bulk upload file, you sleaze".

Iain Dale's effort concocting Tory donors deserves a mention as well.

Barry Eichengreen and the World Economy

Eichengreen provides an analysis of the imbalances in the World Economy similar to that offered by Wolf, as I discussed in an earlier post, but focussing in upon an analysis of different views on the size and importance of the US current account deficit. It is less broad than Wolf and probably less interesting for the policy minded but deals more throroughly with the economic questions behind the problem.

The main weakness he seems to miss of the 'Savvy Investor' view is that it requires foreign investors to be consistently poor decision makers. It would seem likely that if they continue to make poor decisions when investing in the US there is every chance that they will reduce their investment there rather than pressing on regardless. In this regard it appears to be vulnerable to the Lucas critique.

His policy recommendation is the same as the fiscal component of Wolf's but without the focus on changes in developing country financial regulation. He simply advises tighter fiscal policy in the US and more expansionary policy in the developing world. I think Wolf's view is more useful here as changing fiscal policy without suitable financial institutions in the developing world would seem the route to a crisis which would probably have ugly consequences in China in particular.

Blair's plans for reforming the House of Lords

Yesterday in the Telegraph the details of the Labour plans to reform the House of Lords were detailed in an interview with the Lord Chancellor. When I wrote up my ideas for reforming the House of Lords I presumed two objectives. First, ensuring that the house has the democratic legitimacy to challenge the Commons when it needs to. Second, ensuring that its opinions do not change too rapidly in line with the Commons so that it acts to slow intrusions into liberties thanks to transient threats.

It appears, by contrast, that Blair's objectives for the Lords are that it should do very little at all. His opposition to elected Lords was on the grounds precisely that they would be able to challenge the Lords and the new proposals would rob them off their ability to temporarily block most legislation. Fears for the power of the executive can only really be understood as MPs feeling territorial; our system clearly allows huge power to governments which usually have large majorities thanks to first past the post and the freedom of an unwritten constitution. The Lords even now only has the power to delay legislation. While it is understandable that Labour feel it a poor result that their legislation is delayed the items which have been resisted most fiercely in the Lord recently were bills such as the Religious Hatred Act or ID cards which made significant changes to the balance between liberty and control and clearly should not have been passed in a hurry. The ability, under the Parliament Act, to ignore the wishes of the Lords in the final instance provides the Commons with all the supremacy it needs.

Sunday, April 02, 2006

Martin Wolf and the World Economy

Martin Wolf (links from Brad Setser) has set out an immensely broad sweep picture of the state of the imbalances in the world economy. Regardless of the accuracy of his conclusions I would recommend it as a read if you want to try to get to grips with the issue.

His core observation on the world as it stands is that the current policy of Asian countries of neutralising surpluses by recycling to the United States is effective in avoiding an Asian bubble but creates reserves in Asia and deficits in the US which are reaching unmanageable levels, it is also very expensive for Asian countries. For this reason the large Chinese economy needs to move towards less export led growth.

His final conclusions are phrased in terms of a number of actions which need to be taken at the same time but to my mind he has really set out a series of desirable steps such as market exchange rates and a reduction in worldwide surpluses which are contingent on the prior step of reforming financial sectors in developing countries. This is necessary to avoid repeating the Asian Financial Crisis where financial systems which had been successful serving a less developed economy demonstrated vast flaws when dealing with exposure to international finance.

His ideas on how this financial reform should proceed are the Basel standard including strong regulators, proper transparency etc. but he does acknowledge that more information is needed on the efficacy of differing regulatory regimes. This clarity might be provided by the study highlighted in the Economist (requires subscription) which questions the wisdom of granting vast powers to financial regulators in developing states. It would appear that the crucial reforms are particularly those ensuring transparency in the affairs of banks; allowing lenders and borrowers to decide on the soundness of banks rather than empowering an additional layer of, often inscrutable, officialdom.