Apologies to Matthew Parris in the Times but as it paywalled I have pasted his column from today. I believe that this sums up the situation we now find ourselves in, in terms that I can understand anyway.
Hard times: prepare to be 25 per cent poorer
We in the overindulgent, overspent West are living beyond our means. We must live less well or work harder
This spiralling downturn, we are told, is a failure of capitalism. Financial systems have seized up. Liberal market economics isn't working. Someone should have intervened — there should have been regulations, mechanisms, emergency bail-outs — to stop this, and keep us getting richer. Now we must find ways to kick-start growth, recoup the losses we've sustained, and smooth away our debts. Adam Smith's Invisible Hand has let us down.
Rubbish. Adam Smith's Invisible Hand is slapping us about, as we deserve and need. We are in denial. Since 2008, and for the rest of some of our lives, what we have seen and will see is a gigantic market correction. Brutally because belatedly, the market is bringing us crashing back to earth.
We had tried to buck the market and for more than a decade seemed to get away with it. We meant to get richer without working harder. We tried to grow our economies without increasing our productivity. We wanted to grow our health, our welfare and our pension provision at a rate our taxes and our businesses could not sustain. We gave citizens and employees rights without asking how they would be provided for. We in the old Western democracies have been living in cloud-cuckoo-land, and now that we are hurtling towards terra firma we cry foul and demand to know what went wrong.
We went wrong, and the market is telling us so. The market is working. The shock is healthy, overdue, and right.
Yet we find ourselves this autumn in an atmosphere of anger and recrimination. The cry goes up that someone — probably some bankers — made a big mistake, and we must put it right. A huge unstated assumption underlies this caterwauling for a remedy: that the problem is remediable without all of us getting quite a lot poorer.
The problem, it is assumed, has arisen from a glitch in the mechanism of the market — like a blocked petrol pump in a car's engine. The car has stopped. Simple, then: the blockage must be removed so the car can power us on. Bonnet up, we examine the workings; expert economic heads are scratched. But nobody asks where the fuel is coming from. The problem, we assume, is a process problem. So repair the process.
Process, process, process. How this oh-so-millennial fixation has sickened me these past 15 years. It is pure Freudian displacement activity. We keep telling ourselves how we need to have urgent "nationwide debates", great national "conversations", about the way we organise this or that.
And it's all a subliminally induced distraction from the hard questions we don't want to face: obsessing about how we count the votes in the ballot box, rather than talk about what the elected representative, once elected, ought to do. Fiddling with the knives and forks instead of asking where the next meal is coming from.
This autumn, one great evasion dominates all others. We attribute our economic woes to a malfunction in the market. Two principal causes have combined to produce this effect. They are (1) a public misapprehension about the theory of the market economy; and (2) profound embarrassment among politicians and economic commentators because they never saw this coming.
The misapprehension is the belief that free market economics guarantees growth. It doesn't. Most people realise (even if Gordon Brown didn't) that there will be booms and busts, hills and valleys; but they assume the overall trend must be up. Market economics guarantees no such thing. A nation can grow poorer, relatively or even absolutely, and stay poorer. Half the world — America and Europe, for instance — can fall behind permanently. There's nothing automatic about growth. If you're not keeping up with the competition, the free market will shrink your economy. This is not a failure of the market but a failure of your economy.
Politicians and commentators have an unconscious need to persuade themselves — and a conscious need to persuade their audience — that this crash was avoidable. After all, if it was unavoidable then they have some big questions to answer about why they never predicted it. I have found my colleague Anatole Kaletsky's argument that it was somehow all because the US authorities didn't bail out Lehman Brothers, frankly bizarre, as if Lehman was some kind of asteroid hitting our global economy from outer space. If the camel's back was so near breaking then the identity of the last straw seems secondary.
On seaside holidays in childhood my brother and I used to build sand walls against the encroaching tide, racing to shore up whichever section looked closest to being breached. In the end there was always a section that did fail — and it was always the case that it would have held if we had reinforced it better. But another would have failed in its place.
Distrust the temptation to ascribe the crash to a particular catastrophic event: the unlucky failure of a component somewhere in the capitalist machine. The machine has worked with a clumsy and destructive violence, but it has not failed. It roared ahead then ran suddenly out of juice. An engine, however, does not provide its own juice. We — you and I, our fellow countrymen — are the juice. It is upon our labours than a national economy is built. And we haven't been working hard enough; or not for the ever-improving lifestyle and retirement we've come to think our right. Travel beyond Britain, Europe and America and you will encounter a very different approach in the balance people make between what must come from them and what must come to them.
Travel Britain. At every level, too many are doing too little. Many do want work, or more work, but others don't, and they load on to our economy costs that drag down the rest. By what grotesque moral logic do those who won't stop eating become entitled to mobility scooters on the NHS? I mention this trivial idiocy only because it's indicative: something has gone seriously wrong with our idea of entitlement. Greece is simply rather farther down the road.
We in the West cannot continue living like this without overencumbering ourselves and our successors with debt until we topple forward on to our faces. All the rest, all the hocus-pocus about leverage, and sub-prime, and derivatives, and financial instruments, and PFIs and bonds and sovereign debt and bankers' bonuses, tangles into an intellect–baffling thicket, blurring our vision of the truth behind it: we are living, and borrowing, beyond our means. We must live less well, or work harder and longer, or both.
I've stopped deferring to professionals in the world of finance and economics, having found my own uneducated guesses no more deficient than theirs — so I'll venture this. Short of a rebalancing of individual input and output that I fear would be too cruel for any democracy to undertake, we in Europe and America must expect the market correction we'd rather call a market failure to persist, in fits and starts, until we are about 25 per cent poorer than we are today. Not until then will things begin to settle down. That is the message of the markets. Stop blaming the messenger.
Every two weeks or so we hold a man overboard drill which requires us to launch the ship's FRC (Fast Rescue Craft) to carry out an exercise in recovering a man in the water. Today was very suitable with a gentle wind and little sea, well I guess it was suitable as long as we only have people over the side in good weather. Anyway we launched the boat just after leaving Craignure and it zooms away at 27 knots to await our arrival in Oban. Here's a picture of it being recovered once we were alongside.
Dear readers, my apologies if you have visited the blog in the last few days to find that there has been no updates. I am lead to believe that one of the vital requirements for a blog to have and keep its readership is to keep a steady news flow so that there are new items to read, otherwise why visit?
Truth is that little worthy of printing has occurred in the last few days, I joined the Isle of Mull on Wednesday and we have been plying the waters between Mull and Oban on a daily basis with little of note happening along the way. Just like trains and buses our customers don't want anything exciting to happen. Turn up on time, convey us comfortably and safely to the destination and arrive on time is as much as is expected and we are pleased to provide this. Unfortunately unlike my previous employment with Waverley, where each day provided a new anecdote with thrills and spills along the way, the Isle of Mull tends to be pretty predictable.
So it may be a trifle dull on here, but the view from the office window is often spectacular and our customers are happy and so should I be. At the end of the month I am joining Waverley on the Thames for about 10 days so no doubt I will then have ample material to write about.
Euroyachts have published the results from our little fun race on Saturday, to confirm our 5th place out of 15, 5 mins and 21 secs from the first place. Results for the full results.
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| Happy Crew on hearing the race result |
