john birchall

So, a 'liberal',something which is now a term of almost immediate distrust to many Americans has lost the race for the White House. This did not suprise me and being in Brussels on the morning after the result was known was a sombre experience. However, fifty five million US voters did support Kerry. Of this total 88% of all registered 'blacks' supported the Senator, whilst a similar number of whites supported Bush. In winning Bush recorded the lowest percentage vote of any war time President and was not that high in the 'popular vote' statistics either. Alas, as Lyndon Johnson said as he signed the Civil Rights Act ' I have just handed the South to the Republicans for the next three generations'. We have to accept that race, fear and not just of the Muslim faction played a large role in the election and for many outside the eastern strip and its western counterpart their way of life was under threat. Gone is the strategy once used by Nixon that Republicans win when they target the middle ground-no Bush has firmly left 'thinking conservatism' behind. In the Uk we are at least saved this threat and it will be interesting to see how Howard reacts. I doubt if Hilary Clinton or any other non-Southern candidate will win back the White House for the Democrats ( who started as the party of slavery) in 2008. No, the urban, white working class vote and growing parts of its rural equivalent have changed to the Republicans and promises which most don't trust on health reform and economic advantage will not bring them back. So, the man who blatantly lied about Iraq has beaten a party that dared not really take him on regarding the moral highground post 9/11 and attack his record both at home and overseas. We now have confirmation of what many of us thought and that is that the US is more isolationist and preseumably arrogant than it has been for some time. Perhaps our only comforting thought is that we are not French! John Birchall www.johnbirchall-economist.com

Yes, I would be interested in helping colleagues further their use of IT. In recent years I have developed much of the topical sections that allowed Bized to become a well-used site and then moved onto the development the first web-based learning system for business education. I also build the majority of the EU Virtual School Economics and Business Section. John Birchall www.johnbirchall-economist.net

Alas, I can remember where I was when the news of JFK's death came through - Cub Scouts! It was the only time I saw my parents really interested in politics. Since then I have kept an open mind on a man who seemed to offer so much. Ironically, the current democrat candidate has the same initials. Though I am an economist I write on current issues and have collected quite a large collection of interviews with people on the topic of Kennedy and his supposed legacy. John Birchall www.johnbirchall-economist.net

Coming soon to the EU Virtual School (Economics) will be a fully supported course in Global Awareness. I trust that this is useful to colleagues, when it arrives! John http://www.johnbirchall-economist.net/

Coming soon on EU Virtual Schhol (economics) will be a fully supported EU Enlargement Challenge Game. Resource suggestions will form part of the lesson plans. Hope it is useful, when it arrives! john http://www.johnbirchall-economist.net/

I very much doubt if VS will repond. Pity but not unexpected. John

Melvin, I have started to put quite a lot of materials and useful links on my site www.johnbirchall-economist.net. Also you might find the Virtual School useful, a link exists on my site. I am keen to build collaboration and communication across EU states, so please contact me whenever you want. Best wishes, John http://www.johnbirchall-economist.net/

You might like to visit www.globalwitness.org which specialises in tracing how much money is raised from resource exploitation and how much is actually recorded. The majority of its work concerns the developing world. John www.johnbirchall-economist.net

I have recently been using the following. They are quite good and you might like to pay them a visit. It would be nice if some of our visitors suggested other sites we could visit. www.socialstudies.com/economics. www.jpec.org/humanities www.spot.colarado.edu www.investopedia.com/university/economics www.digitaleconokmics.com Best wishes, john Birchall www.johnbirchall-economist.net

Alas, we seem to agree on the sad state of the VS. I have written considerable amounts of material for the site and produced almost no repsonse. Is this because everything is in English? I have also offered to work with my French and German equivalents and try to build connections with the two single largest markets that exist within the EU. To my suprise VS seems disinterested in traffic figures and response levels! I did enjoy a few days of dialogue with some Italian teachers but that has now stopped. I just wonder if all the costs and individual work is really worth it? John www.johnbirchall-economist.net

sorry I did not realise where you had first seen his work. I feel that in essence he is correct but he does tend to reduce the inequalities caused by MNC'c to a minimum. Best wishes, John www.johnbirchall-economist.net

Cigarettes have been causing the same problems since the times of James 1! Where do you tax in a post Thatcher era - that is we have been told that we should not pay high rates of tax? Franco kept booze and fags cheap for the workers, whilst the UK talks of freedom to select what you want. I was in Birkenhead yesterday and I would not want to increase the tax on booze and stand for election! I do beleive that more repsonsible behaviour towards drink, especially amongst the young will favour higher taxes. I would also like to see brewers pay for alcoholic dry out centres and something toeards the high cost of drink related RTA's - a policy once put forward by Robert Kilroy Silk!! john www.johnbirchall-economist.net

The forum recently received a boost in traffic from Italy but it is beginning to wane. We are on VS, then Economics, then Community and a join sign comes up. I have tried to get BOTH France and Germany on board but that is VERY diffcult. John www.johnbirchall-economist.net

Dear Dalibor, I am pleased that what I wrote introduced you to one of your fellow countrymen. I do not agree with all he says but our exchanges of correspondence have been most constructive. Indeed, he has written a small piece for me for a seminar I am holding in Sierra Leone this April. We are discussing development strategies and Johan's ideas deserve considerable attention. I can only hope that in a society such as yours that he is encouraged to speak and write, for only then will those opposed to his ideas be able to fully grasp the complexities of what he says. Best wishes, John www.johnbirchall-economist.net

John and others, It's amazing what a difference a few days can make. I finally made contact with Italian students from Verona and now we have a large number of disccussions taking place. Most contain more philosophy than anything I have experienced in UK! Indeed, I am kept rather busy answering everything. Alas, I have not been able to entice either French or German participation. I did have to work hard producing powerpoint presentations, weekly news, analysis of current affairs and other features and then the visitors had something to look at and use. So, at last some good news but like others I am always amazed by the lack of concern amongst those at VS regarding traffic and real involvement. I'll stop there as I might say something that will annoy those in Brussels!! John www.johnbirchall-economist.net

Letter from an Economist – 1st March 2004. ‘The fine line along which Kerry must tread’ With Senator John Kerry now building a considerable lead in the race to take on George W Bush next November it is perhaps advisable that we look at some of the main economic problems he faces. It is never easy to list priorities but I do feel that he will face an opponent who is surrounded by those who wish to promote the school known as ‘protectionism’. The Bush team are using an old target as the reason for making protectionist noises and that is employment protection. As in many EU countries it seems probable that job protection will be central to the US election and that Kerry will face pressures from within his own party to be hard on free trade. If so, then I for one believe that he too will be making a serious mistake. I fully agree with the essential doctrines of free trade and that an economy such as the US would be the poorer if it turned its back on world markets. Furthermore, if the US started such a campaign others would follow and a downward spiral would be set in motion. Yet it is not good economics to pretend that any policy and that includes free trade is good for everyone all of the time. Surely, we are all aware that in any economic decision we are dealing with trade-offs’ and these involve both winners and losers. The pace at which globalisation is growing means that we have to re-visit some of our beliefs regarding free trade and it is this that Senator Kerry is wrestling with. I hope he does not go down the easy option route. Let’s think what it is he faces. Put in simple US terms and such sentiments could soon return to the UK workers are fearing for their jobs as Chinese factories undercut traditional production centres and India becomes the focal point for increasing proportions of the call centre and technology businesses. These are genuine fears and addressing them is not protectionism. No, for me being aware of what is happening beyond your own geographical boundaries is realistic politics and part of a sensible attitude towards free trade. If the Republicans continue to get their way with domestic economy before the election then if he wins in November Kerry might face a Congress with too many members looking for a short-term fix and thinking that protectionism is the answer to all of their problems. I am therefore pleased to note that last week Kerry spoke of his sadness at the loss of jobs to imports but was careful to make no concrete policy suggestions as to how he would address this problem. The text of his speech seemed to accept that he will need to be seen to do something but that in reality it will be a slowing down procedure and not a formal this has to stop reaction. He did not see outsourcing as a scourge of our time but he did feel that both private enterprise and their public sector equivalent will have to inform his Administration before simply closing a factory or service outlet and transferring everything to a low cost country. He also accepted that offshore tax loopholes will need to be looked at and that such a move will undoubtedly bring charges of ‘interventionist’ from his political opponents. He even went as far as saying that his representatives in future trade discussions would be more aggressive in enforcing already agreed policies. To balance this ‘hard talk’ and it is an election year he also pointed to the need to keep the environment right at the top of any trade discussions. Doubtless one of Al Gore’s vote winners will not be forgotten. So Senator Kerry seems to be talking economic sense and with a distinct appearance of being a ‘safe pair of hands’ but will he actually tackle the big issues and sadly can he afford to? The US economy is at least four million jobs below its optimum and imports plus outsourcing do not account for most of this figure. No, it might just be that some old fashioned Franklin Roosevelt thinking might have to enter the Kerry’s thinking – a gamble which was good to Clinton in 1992 but quickly dumped once Gindrich took control of ‘the hill’ in 1994. A recent Republican-led bill that ended long term unemployment benefits will do little for the living standards of what are a growing number of long-term unemployed in the US. As all politicians know the nearer you get to an election the more the electorate focuses on what they want in their pockets. Bush knows this hence his speech last week contained many references to tax breaks and high spending Democratic regimes. He also used the ‘war’ card and probably kept his fingers crossed that Iraq does not implode between now and polling day. If we return to what Kerry might say and promise to do we begin to include some interesting areas of policy. It remains a mystery to most that the largest and richest economy in the world still does not have universal health care. Surely, the provision of such a fundamental corner stone of most other free trade economies would assist the US in appearing to actually make free markets work for all its citizens! By not doing so the isolationist charge must gather credence. For free trade to be most effective and politically acceptable it has to be seen to promote strong domestic cohesion. So, will Kerry support job creation programmes and other social interventionist actions? It is his choice but he might like to ponder on one interesting fact of recent economic history. It is that the two most growth orientated Presidents were Roosevelt and Truman and they actually promoted the development of free trade. Whilst the two most protectionist Presidents in recent times have been Ronald Reagan and yes you have guessed George W Bush. We will need to look very closely at the small print in Senator Kerry’s speeches as the campaign unfolds. It might yet be a truly ‘watershed election’ and I for one hope so. john Birchall www.johnbirchall-economist.net

Letter from an Economist – 1st March 2004. ‘The fine line along which Kerry must tread’ With Senator John Kerry now building a considerable lead in the race to take on George W Bush next November it is perhaps advisable that we look at some of the main economic problems he faces. It is never easy to list priorities but I do feel that he will face an opponent who is surrounded by those who wish to promote the school known as ‘protectionism’. The Bush team are using an old target as the reason for making protectionist noises and that is employment protection. As in many EU countries it seems probable that job protection will be central to the US election and that Kerry will face pressures from within his own party to be hard on free trade. If so, then I for one believe that he too will be making a serious mistake. I fully agree with the essential doctrines of free trade and that an economy such as the US would be the poorer if it turned its back on world markets. Furthermore, if the US started such a campaign others would follow and a downward spiral would be set in motion. Yet it is not good economics to pretend that any policy and that includes free trade is good for everyone all of the time. Surely, we are all aware that in any economic decision we are dealing with trade-offs’ and these involve both winners and losers. The pace at which globalisation is growing means that we have to re-visit some of our beliefs regarding free trade and it is this that Senator Kerry is wrestling with. I hope he does not go down the easy option route. Let’s think what it is he faces. Put in simple US terms and such sentiments could soon return to the UK workers are fearing for their jobs as Chinese factories undercut traditional production centres and India becomes the focal point for increasing proportions of the call centre and technology businesses. These are genuine fears and addressing them is not protectionism. No, for me being aware of what is happening beyond your own geographical boundaries is realistic politics and part of a sensible attitude towards free trade. If the Republicans continue to get their way with domestic economy before the election then if he wins in November Kerry might face a Congress with too many members looking for a short-term fix and thinking that protectionism is the answer to all of their problems. I am therefore pleased to note that last week Kerry spoke of his sadness at the loss of jobs to imports but was careful to make no concrete policy suggestions as to how he would address this problem. The text of his speech seemed to accept that he will need to be seen to do something but that in reality it will be a slowing down procedure and not a formal this has to stop reaction. He did not see outsourcing as a scourge of our time but he did feel that both private enterprise and their public sector equivalent will have to inform his Administration before simply closing a factory or service outlet and transferring everything to a low cost country. He also accepted that offshore tax loopholes will need to be looked at and that such a move will undoubtedly bring charges of ‘interventionist’ from his political opponents. He even went as far as saying that his representatives in future trade discussions would be more aggressive in enforcing already agreed policies. To balance this ‘hard talk’ and it is an election year he also pointed to the need to keep the environment right at the top of any trade discussions. Doubtless one of Al Gore’s vote winners will not be forgotten. So Senator Kerry seems to be talking economic sense and with a distinct appearance of being a ‘safe pair of hands’ but will he actually tackle the big issues and sadly can he afford to? The US economy is at least four million jobs below its optimum and imports plus outsourcing do not account for most of this figure. No, it might just be that some old fashioned Franklin Roosevelt thinking might have to enter the Kerry’s thinking – a gamble which was good to Clinton in 1992 but quickly dumped once Gindrich took control of ‘the hill’ in 1994. A recent Republican-led bill that ended long term unemployment benefits will do little for the living standards of what are a growing number of long-term unemployed in the US. As all politicians know the nearer you get to an election the more the electorate focuses on what they want in their pockets. Bush knows this hence his speech last week contained many references to tax breaks and high spending Democratic regimes. He also used the ‘war’ card and probably kept his fingers crossed that Iraq does not implode between now and polling day. If we return to what Kerry might say and promise to do we begin to include some interesting areas of policy. It remains a mystery to most that the largest and richest economy in the world still does not have universal health care. Surely, the provision of such a fundamental corner stone of most other free trade economies would assist the US in appearing to actually make free markets work for all its citizens! By not doing so the isolationist charge must gather credence. For free trade to be most effective and politically acceptable it has to be seen to promote strong domestic cohesion. So, will Kerry support job creation programmes and other social interventionist actions? It is his choice but he might like to ponder on one interesting fact of recent economic history. It is that the two most growth orientated Presidents were Roosevelt and Truman and they actually promoted the development of free trade. Whilst the two most protectionist Presidents in recent times have been Ronald Reagan and yes you have guessed George W Bush. We will need to look very closely at the small print in Senator Kerry’s speeches as the campaign unfolds. It might yet be a truly ‘watershed election’ and I for one hope so. John Birchall www.johnbirchall-economist.net

As ever John Simkin both hits the very core of the debate and informs. One has to ask if governments in the developed economies will ever be prepared to promote fair trade or reduce the discriminatory tariffs that are imposed on some of the goods that come in from developing economies. Is employment and vote protection always going to win over ethical trading or more global awareness? It might just be that increasing the level of domestic income within the poorer nations would boost their demand and much of this would flow back to the developed economies in terms of increased orders for our products. Like so much of economics it is a trade-off and there are winners and losers. Perhaps the more we write and inform the younger members of our own economies of the anomolies that exist in international economics the more 'value added' will stay in the countries of production? John Birchall www.johnbirchall-economist.net

Those interested in politics might like to give some thought to the dilemmas posed in this brief analysis of how we tackle the growing division betwen the rich and the poor world. Letter from an Economist - 23rd February 2004. I am beginning this edition sat in the foyer of a rather nice hotel in Brussels. Outside several doormen are busy calling taxis to take business people around this bustling city. This morning I walked just a few hundred yards, sorry metres, behind the hotel looking for a newspaper shop. Suddenly, I was in one of the seediest places I have seen for many years and there in front of me were young men encouraging male passers by to make use of the 'assets' they controlled within many of the surrounding buildings. The contrast was very difficult to accept. Back in the hotel BBC World TV informed me of the growing debate regarding what to do with a sudden influx of economic migrants that might arrive post the EU expansion to twenty five members in May of this year. My brief visit to what lay just behind the back the hotel had allowed me to buy a copy of The International Herald Tribune. Within this respected journal was an article on Gordon Brown's recent proposals for addressing poverty and within it were a number of interesting points that started me thinking. My schedule did not allow immediate action on the stimulus given by The Chancellor's thoughts and soon I was listening to a lecture on EU Regional Policy and its main targets. Naturally, the official charged with informing us of the apparent success of this programme selected his data with care and told of how Ireland, Spain etc had been relatively poor countries prior to their respective entries to the EU and that they were now ahead of the mean income of the entire community. This, in his opinion had been achieved by: * not spending nearly as much as many sources suggest the EU does - the entire budget is just one percent of the gross national income of all member States * focusing on investment and not income led programmes, such as unemployment pay * planning for seven year budgets and not annual negotiations with national treasuries * Not having to satisfy political cycles and their need for short-term, voter attractive schemes Put in economic language the EU has followed an interventionist approach and feels that it has been successful. Now, one could argue that an organisation created mainly by those with a centre-left agenda would align them to such a policy but it is interesting to note how many new countries want to receive these injections to their economies. Many lived for nearly half a century with forced intervention as the principal feature of all policy creation and application, yet they want to sign-up to a system that is essentially non free market but business friendly. Now, one of my briefs when writing these weekly meanders through all things economic is to promote exchanges of ideas through the EU Virtual School Community, my own site and its discussion forum and The Education Forum. So, let's look at how the poorer nations of this planet might break out of the vicious cycle of poverty. Some of you might think that such a topic is not really going to affect you but think about: * Immigration and all its possible implications * Yet more TV documentaries showing emaciated women struggling to feed their listless child * The moral and ethical problems that will infiltrate our teaching if we continue to get richer whilst others blatantly do not To encourage debate I have quickly outlined some other ideas that are currently 'doing the rounds' in economic circles. The free market approach This is very much the US way of doing things and those of you tracking the Presidential Election might like to look at Dean's domestic agenda and see how quickly that has been 'watered down' by those who have defeated him in the primaries. I don't think he openly addressed world poverty but his health reforms have sent shivers down the spines of the middle classes and engaged many young, first time voters. Now, the US favours allowing capital to flow in search of profit and quite large amounts arrive on the US-Mexican border. Here it builds such essentials as washing machines. In a recent ITV documentary the interviewer asked the manager of the Whirlpool plant if his workers could afford to buy what they built. His answer was more honest than one might have expected, for he suggested that such consumer durables require water, electricity and systems for waste disposal. None of these were available to his workers. The libertarian school For me the most interesting writer in this school of thought is Johan Norberg. This young Swedish 'radical' thinker has been kind enough to write a short piece for me on how Sierra Leone might seek economic growth. Put simply he sees property rights, the rule of law and the introduction of land reform and accountable and transparent government as the major prerequisites of any development programme. He also suggests that MNC's can be the catalysts for domestic growth and improvements in living standards both for those employed by these organisations and those working for domestic concerns that want to keep a stable and satisfied workforce. The debt school of thought The Jubilee Group used the year 2000 to push for the eradication of most of the debts owed by developing countries to both private banks and government programmes. They felt that this would release resources, build confidence and possibly attract back some of those lost in the 'brain drain' that has robbed many developing countries of their most productive citizens. So, we have in front of us an all too brief outline of just some of the possible routes out of poverty. Before closing and inviting you to comment on how you would address such huge problems let's just look for a few minutes at the economies that between them include one third of the world's population. I refer to China and India. When I first became interested in development economics the disparities in income distribution between the rich and poor was, in my opinion, obscene. I watched with interest as countries such as Malaysia and Singapore leapt forward in economic terms. These small nations recorded enormous growth figures but global data was always pulled down by China, India and most of sub-Saharan Africa. Today, the first two who once deflated the average growth rates of the planet are beginning to record similar numbers to those previously posted by many of the Tiger economies. How has this happened? Well, liberalisation of domestic markets and the reduction in barriers to foreign capital flows have obviously played a large role in what is now becoming the first economic success story of this century. Now, one of my age knows that rapid economic growth can increase the anomalies of income distribution within a country but at least the creation of economic wealth allows funds to be available to tackle such inequalities. Whatever ones previous ideas it is difficult to argue that foreign direct investment has been a major driver behind the growing success of the markets that attempt to feed etc 2.3billion people. The other possible growth stimulant factor that seems so often to be missed is that of foreign education and how this adds value to the young people who receive it. Those fortunate to travel to the US, UK, Australia etc return with new ideas and a desire to put these into practice in the domestic business sector. The Chinese experiment is older than that of the Indian equivalent and seems to be more dependent on foreign capital than India's. However, the latter is forging ahead in IT as graduates return from the west coast of the US and open new businesses. For many who make such huge journeys to far-off lands their immediate post graduation period is spent earning money in their adopted country. Much of this money is sent back home and used to save and invest in the business fabric that they will one day return to manage and develop. For some of you I maybe am appearing to change my spots and to suddenly be a supporter of global capitalism as the only way forward. Let me lay to rest this charge. No, I too suspect some, if not many of the motives of the global brands but monies repatriated to China and India are not used to buy ready-made consumer goods, no they are invested in the products of local manufacturers. The multiplier effect is greater than when huge sums are given to the public sector to distribute. Alas, one cannot export the experiences of one country to another - a one size fits all approach simply does not work. But in our deliberations perhaps we can address the old topic of ' is top-down better than bottom-up' when addressing the problems posed by development? Do human beings react best when being told what to do, or do they actually know what is best for their own economic, social and political environment? Perhaps the experts need to come out of their ivory towers in New York, London, Paris etc and ask those at the bottom of the economic pyramid how they have started to record very the growth rates that others have long suggested they should. All too often those who have thought that they knew best have gone away wringing their hands and suggesting that millions of people are always getting it wrong!! Over to you - I look forward to discussing this brief tour through the largest single problem facing us all with those who can afford a few minutes on the 'information super highway'. So, let's hear from those who log onto Triple A Learning, or The Education Forum, The Virtual School and the other places in which these 'Letters' appear. John birchall www.johnbirchall-economist.net

Letter from an Economist - 23rd February 2004. I am beginning this edition sat in the foyer of a rather nice hotel in Brussels. Outside several doormen are busy calling taxis to take business people around this bustling city. This morning I walked just a few hundred yards, sorry metres, behind the hotel looking for a newspaper shop. Suddenly, I was in one of the seediest places I have seen for many years and there in front of me were young men encouraging male passers by to make use of the 'assets' they controlled within many of the surrounding buildings. The contrast was very difficult to accept. Back in the hotel BBC World TV informed me of the growing debate regarding what to do with a sudden influx of economic migrants that might arrive post the EU expansion to twenty five members in May of this year. My brief visit to what lay just behind the back the hotel had allowed me to buy a copy of The International Herald Tribune. Within this respected journal was an article on Gordon Brown's recent proposals for addressing poverty and within it were a number of interesting points that started me thinking. My schedule did not allow immediate action on the stimulus given by The Chancellor's thoughts and soon I was listening to a lecture on EU Regional Policy and its main targets. Naturally, the official charged with informing us of the apparent success of this programme selected his data with care and told of how Ireland, Spain etc had been relatively poor countries prior to their respective entries to the EU and that they were now ahead of the mean income of the entire community. This, in his opinion had been achieved by: * not spending nearly as much as many sources suggest the EU does - the entire budget is just one percent of the gross national income of all member States * focusing on investment and not income led programmes, such as unemployment pay * planning for seven year budgets and not annual negotiations with national treasuries * Not having to satisfy political cycles and their need for short-term, voter attractive schemes Put in economic language the EU has followed an interventionist approach and feels that it has been successful. Now, one could argue that an organisation created mainly by those with a centre-left agenda would align them to such a policy but it is interesting to note how many new countries want to receive these injections to their economies. Many lived for nearly half a century with forced intervention as the principal feature of all policy creation and application, yet they want to sign-up to a system that is essentially non free market but business friendly. Now, one of my briefs when writing these weekly meanders through all things economic is to promote exchanges of ideas through the EU Virtual School Community, my own site and its discussion forum and The Education Forum. So, let's look at how the poorer nations of this planet might break out of the vicious cycle of poverty. Some of you might think that such a topic is not really going to affect you but think about: * Immigration and all its possible implications * Yet more TV documentaries showing emaciated women struggling to feed their listless child * The moral and ethical problems that will infiltrate our teaching if we continue to get richer whilst others blatantly do not To encourage debate I have quickly outlined some other ideas that are currently 'doing the rounds' in economic circles. The free market approach This is very much the US way of doing things and those of you tracking the Presidential Election might like to look at Dean's domestic agenda and see how quickly that has been 'watered down' by those who have defeated him in the primaries. I don't think he openly addressed world poverty but his health reforms have sent shivers down the spines of the middle classes and engaged many young, first time voters. Now, the US favours allowing capital to flow in search of profit and quite large amounts arrive on the US-Mexican border. Here it builds such essentials as washing machines. In a recent ITV documentary the interviewer asked the manager of the Whirlpool plant if his workers could afford to buy what they built. His answer was more honest than one might have expected, for he suggested that such consumer durables require water, electricity and systems for waste disposal. None of these were available to his workers. The libertarian school For me the most interesting writer in this school of thought is Johan Norberg. This young Swedish 'radical' thinker has been kind enough to write a short piece for me on how Sierra Leone might seek economic growth. Put simply he sees property rights, the rule of law and the introduction of land reform and accountable and transparent government as the major prerequisites of any development programme. He also suggests that MNC's can be the catalysts for domestic growth and improvements in living standards both for those employed by these organisations and those working for domestic concerns that want to keep a stable and satisfied workforce. The debt school of thought The Jubilee Group used the year 2000 to push for the eradication of most of the debts owed by developing countries to both private banks and government programmes. They felt that this would release resources, build confidence and possibly attract back some of those lost in the 'brain drain' that has robbed many developing countries of their most productive citizens. So, we have in front of us an all too brief outline of just some of the possible routes out of poverty. Before closing and inviting you to comment on how you would address such huge problems let's just look for a few minutes at the economies that between them include one third of the world's population. I refer to China and India. When I first became interested in development economics the disparities in income distribution between the rich and poor was, in my opinion, obscene. I watched with interest as countries such as Malaysia and Singapore leapt forward in economic terms. These small nations recorded enormous growth figures but global data was always pulled down by China, India and most of sub-Saharan Africa. Today, the first two who once deflated the average growth rates of the planet are beginning to record similar numbers to those previously posted by many of the Tiger economies. How has this happened? Well, liberalisation of domestic markets and the reduction in barriers to foreign capital flows have obviously played a large role in what is now becoming the first economic success story of this century. Now, one of my age knows that rapid economic growth can increase the anomalies of income distribution within a country but at least the creation of economic wealth allows funds to be available to tackle such inequalities. Whatever ones previous ideas it is difficult to argue that foreign direct investment has been a major driver behind the growing success of the markets that attempt to feed etc 2.3billion people. The other possible growth stimulant factor that seems so often to be missed is that of foreign education and how this adds value to the young people who receive it. Those fortunate to travel to the US, UK, Australia etc return with new ideas and a desire to put these into practice in the domestic business sector. The Chinese experiment is older than that of the Indian equivalent and seems to be more dependent on foreign capital than India's. However, the latter is forging ahead in IT as graduates return from the west coast of the US and open new businesses. For many who make such huge journeys to far-off lands their immediate post graduation period is spent earning money in their adopted country. Much of this money is sent back home and used to save and invest in the business fabric that they will one day return to manage and develop. For some of you I maybe am appearing to change my spots and to suddenly be a supporter of global capitalism as the only way forward. Let me lay to rest this charge. No, I too suspect some, if not many of the motives of the global brands but monies repatriated to China and India are not used to buy ready-made consumer goods, no they are invested in the products of local manufacturers. The multiplier effect is greater than when huge sums are given to the public sector to distribute. Alas, one cannot export the experiences of one country to another - a one size fits all approach simply does not work. But in our deliberations perhaps we can address the old topic of ' is top-down better than bottom-up' when addressing the problems posed by development? Do human beings react best when being told what to do, or do they actually know what is best for their own economic, social and political environment? Perhaps the experts need to come out of their ivory towers in New York, London, Paris etc and ask those at the bottom of the economic pyramid how they have started to record very the growth rates that others have long suggested they should. All too often those who have thought that they knew best have gone away wringing their hands and suggesting that millions of people are always getting it wrong!! Over to you - I look forward to discussing this brief tour through the largest single problem facing us all with those who can afford a few minutes on the 'information super highway'. So, let's hear from those who log onto Triple A Learning, or The Education Forum, The Virtual School and the other places in which these 'Letters' appear.

The devil will be in the detail! With the recent announcements made by Oliver Letwin the campaign for the next UK election has begun in earnest. Whatever one's political persuasion there is a growing feeling amongst the electorate that certain areas of our public sector do not deliver improvements in service whatever sums of increased spending are given to them. This has been noted by the Honourable Opposition. The Tory Shadow Chancellor (a former Oxford Philosophy Don) has carefully selected his figures and has based his promises and estimates of reduced expenditure on 2001-02 for the percentage of the national income going into public spending. So, whatever he proposes his figures will only result in the percentage of government revenues as a proportion of national income returning to what they were just two fiscal years ago. Let's join what he calls 'an adult debate' and suggest ways in which he might square what seems to be a rather difficult circle. He wants to reduce public expenditure as a percentage of national income by £35 billion by the tax year 2010-11 - that is 40% of all monies raised by UK living and working within and outside of the UK. Put simply he will want to reduce total government spending by somewhere in the region of .75%, so we are not really talking huge sums - or are we? As with many opposition politicians he and his colleagues have been busy making promises of what they will do if elected to office. It seems that the two most sensitive areas of public spending, namely education and health will receive increases in real terms post a Tory victory in 2005 or 06. This may sound pleasing but opposition spokespersons have also been making vote catching promises including 5000 extra police personnel for London and our other metropolitan centres. These, we are told will be paid for changes in immigration policy. One has to ask what changes and how will EU enlargement, due in June of this year, affect such calculations? The largest area of public expenditure is not health but social security. So, will this area be subjected to cost cuts? If so, where and by how much? Unemployment is but a small percentage of the budget of the Work and Pensions Ministry and the real spending takes place in personal benefits, pensions (which one of Mr Letwin's colleagues has promised to return to being inline with earnings and not inflation) and child related payments. Will any Chancellor dare to cut these? What of our transport system, which in the opinion of a growing number of those who regularly use it, is marginally better than some developing economies? How will we pay for our roads and rail developments? A failure to address these is a legacy of Mr Letwin's predecessors on both sides of the House. If our competitive advantage is to be maintained in the digital age, which will be compounded by the added problem of low cost economies joining the EU, we will need to be able to move products and people around the UK and beyond with much greater efficiency that we currently do. Defence remains a major area of government expenditure and with our colonial past and 'special relationship' with the US it seems unlikely that significant cuts will be found in military spending. Such a task has been made even more difficult by the persistent reports of inadequate equipment in the recent encounters in the former Yugoslavia, Afghanistan and Iraq. Once one has left the realms of defence behind the minnows of public expenditure are reached. Housing was the largest single loser in the 1980 and 90's, so little room is left for cuts there. We might, especially now Mrs Beckett has changed the way farming subsidies are awarded, save some money under the Agriculture allocation but again this is just a few billion over several years. I have never heard of anyone who can find real cuts in expenditure in what is spent on Northern Ireland, the Environment or our diplomatic corps! No, what readers of economics, politics and philosophy have to adjust to is that these comments of Mr Letwin might just be the opening remarks in a debate on how much government will provide and what the individual citizen will need to finance in the second decade of this century. Are we about to deliberate on more prominent role for private pensions, or a greater influence for private medicine in even the most basic areas of the NHS e.g. Accident and Emergency? How will the apparent £9 billion gap in higher education funding be filled? Put bluntly the apparent consensus post 1945 that the Social Market provides the best quality of life for as many individuals as possible might be under serious scrutiny - what public/private balance will emerge if Mr Letwin does move into 11 Downing Street? Even Margaret Thatcher presided over real increases in public expenditure. Geoffrey Howe's remark of the 'nanny state' was said more to appease the right wing of his party that to actually lead a crusade against waste and inefficiency. The battle lines of the next election might yet not appear in the conversations of the mythical 'man on the Clapham omnibus' but they soon will. So, over to our growing membership to begin discussing (in a grown up way) just what the United Kingdom will look like in ten years time. Oh and before our members from outside this green and pleasant land feel that all of this does not refer to them might I suggest that France is looking at ways of reducing its health expenditure by £9 billion, the German economy is about to experience significant cuts in social security benefits and it does seem that where the United Kingdom goes others soon follow. Sorry, but our economic policies of the 1980's and 90's are coming across The Channel to a Ministry of Finance near to you - and soon. John Birchall john_birchall@bsc.biblio.net

The devil will be in the detail! With the recent announcements made by Oliver Letwin the campaign for the next UK election has begun in earnest. Whatever one's political persuasion there is a growing feeling amongst the electorate that certain areas of our public sector do not deliver improvements in service whatever sums of increased spending are given to them. This has been noted by the Honourable Opposition. The Tory Shadow Chancellor (a former Oxford Philosophy Don) has carefully selected his figures and has based his promises and estimates of reduced expenditure on 2001-02 for the percentage of the national income going into public spending. So, whatever he proposes his figures will only result in the percentage of government revenues as a proportion of national income returning to what they were just two fiscal years ago. Let's join what he calls 'an adult debate' and suggest ways in which he might square what seems to be a rather difficult circle. He wants to reduce public expenditure as a percentage of national income by £35 billion by the tax year 2010-11 - that is 40% of all monies raised by UK living and working within and outside of the UK. Put simply he will want to reduce total government spending by somewhere in the region of .75%, so we are not really talking huge sums - or are we? As with many opposition politicians he and his colleagues have been busy making promises of what they will do if elected to office. It seems that the two most sensitive areas of public spending, namely education and health will receive increases in real terms post a Tory victory in 2005 or 06. This may sound pleasing but opposition spokespersons have also been making vote catching promises including 5000 extra police personnel for London and our other metropolitan centres. These, we are told will be paid for changes in immigration policy. One has to ask what changes and how will EU enlargement, due in June of this year, affect such calculations? The largest area of public expenditure is not health but social security. So, will this area be subjected to cost cuts? If so, where and by how much? Unemployment is but a small percentage of the budget of the Work and Pensions Ministry and the real spending takes place in personal benefits, pensions (which one of Mr Letwin's colleagues has promised to return to being inline with earnings and not inflation) and child related payments. Will any Chancellor dare to cut these? What of our transport system, which in the opinion of a growing number of those who regularly use it, is marginally better than some developing economies? How will we pay for our roads and rail developments? A failure to address these is a legacy of Mr Letwin's predecessors on both sides of the House. If our competitive advantage is to be maintained in the digital age, which will be compounded by the added problem of low cost economies joining the EU, we will need to be able to move products and people around the UK and beyond with much greater efficiency that we currently do. Defence remains a major area of government expenditure and with our colonial past and 'special relationship' with the US it seems unlikely that significant cuts will be found in military spending. Such a task has been made even more difficult by the persistent reports of inadequate equipment in the recent encounters in the former Yugoslavia, Afghanistan and Iraq. Once one has left the realms of defence behind the minnows of public expenditure are reached. Housing was the largest single loser in the 1980 and 90's, so little room is left for cuts there. We might, especially now Mrs Beckett has changed the way farming subsidies are awarded, save some money under the Agriculture allocation but again this is just a few billion over several years. I have never heard of anyone who can find real cuts in expenditure in what is spent on Northern Ireland, the Environment or our diplomatic corps! No, what readers of economics, politics and philosophy have to adjust to is that these comments of Mr Letwin might just be the opening remarks in a debate on how much government will provide and what the individual citizen will need to finance in the second decade of this century. Are we about to deliberate on more prominent role for private pensions, or a greater influence for private medicine in even the most basic areas of the NHS e.g. Accident and Emergency? How will the apparent £9 billion gap in higher education funding be filled? Put bluntly the apparent consensus post 1945 that the Social Market provides the best quality of life for as many individuals as possible might be under serious scrutiny - what public/private balance will emerge if Mr Letwin does move into 11 Downing Street? Even Margaret Thatcher presided over real increases in public expenditure. Geoffrey Howe's remark of the 'nanny state' was said more to appease the right wing of his party that to actually lead a crusade against waste and inefficiency. The battle lines of the next election might yet not appear in the conversations of the mythical 'man on the Clapham omnibus' but they soon will. So, over to our growing membership to begin discussing (in a grown up way) just what the United Kingdom will look like in ten years time. Oh and before our members from outside this green and pleasant land feel that all of this does not refer to them might I suggest that France is looking at ways of reducing its health expenditure by £9 billion, the German economy is about to experience significant cuts in social security benefits and it does seem that where the United Kingdom goes others soon follow. Sorry, but our economic policies of the 1980's and 90's are coming across The Channel to a Ministry of Finance near to you - and soon. John Birchall john_birchall@bsc.biblio.net

For the last two years I have been (a) trying to build traffic to my section of the VIRTUAL SCHOOL - www.eun.org/virtual school and ( develop collaboration and co-operation amongst European business education teachers. Is there anyone out there who would like to join in these VERY frustrating tasks? John john-Birchall@bsc.biblio.net www.johnbirchall-economist.net

It is always interesting to think how long a week can be in politics. Bush is now parading his military service records infront of a nation who would have totally ignored such an issue if Clinton had been the Democratic front runner. Kerry is looking stronger by the primary but he will need to win 70%+ of the votes outside of 'the South' if he is to remove Bush from The White House. With just 50% of those able to vote likely to attend a polling station in November the magnitude of the task is considerable. In the States talk has begun as to who will be Kerry's running mate. Some favour Bill Richardson, others think Gephardt may yet make it as the number 2. I just wonder if Edwards might be the choice or Clarke - the latter will be a useful member of the ticket if Iraq drags on. He is also a southerner and was put forward by Clinton. Whatever their personal relations Hilary will come out and speak for the ticket if her man's choice is onboard.It also seems likely that Cheney will 'retire' and that the Republicans will be looking for a new VP and one who, if they win, can be the Presidential candidate in 2008. It is also interesting to note that the leaders of France, Germany and Britain are meeting. Is this the start of a more pro-active EU stance on world affairs? Whatever ones opinion on Blair he remains very popular in a number of mainland continental countries. Blair is a 'touch' politician, so his overtures 'across the pond' will be interesting to watch. If 2000 was close then this one will be bitter and already one story of Kerry and a young woman has circulated. One can only hope that the American people make a wise choice! john john_birchall@bsc.biblio.net

Letter from an Economist – 16th February 2004. Who really is calling the shots? Everybody would like China to revalue its currency. Alas, those in power in Beijing will not allow this and few can design a way of making them change their minds. Despite all the collective muscle of the G7 it is incapable of making the fastest growing and ultimately most powerful economy in the world change its mind. Within Europe the value of the Euro is causing concern but those in Frankfurt with control over short term interest rates are reluctant to cut rates. In the US the value of the dollar has moved from its prominent position in the news at the close of 2003 and has been replaced by both Iraq and the Presidential Election campaign. So, what is happening in the normally turbulent foreign exchange markets? If we go back to the time when economics was undergoing a sea change and by this I refer to the early 1980’s it was the US who appeared weak. Its federal budget deficit was exploding as Reagan cut taxes and boosted defence expenditure. At that time the US needed close allies to support the value of the dollar. Japanese savings played a large part in maintaining capital flows and some even joked (possibly in bad taste) that Pearl Harbour could never be repeated as the Japanese owned much of what might be bombed! Germany too assisted the dollar and allowed it to move through difficult period. The behaviour of the current administration in Washington leaves one asking if the US no longer considers the impact of its economic policies on its allies to be a major cause of concern when protecting domestic interests. Today, the US reigns supreme and cares to ignore how a weak dollar impacts on the economies of mainland Europe. I have suggested before that it is the Chinese who the US fears both as a trading power and the only possible ‘superpower’ to emerge as this century proceeds. Maybe Donald Rumsfeld meant that all of Europe was ‘old’ and that it’s Asia who is ‘new’? If this is correct then we are witnessing a significant change in how post war (1945) economics is evolving and we need to think carefully about who is ‘calling the shots’. The current malaise of the monetary authorities in Europe might be a realistic reaction to the changes that were introduced in the early years of this century. To be fair they might be waiting to see what happens as events such as the Euro settle down and we can analyse the impact they have had. The enlargement, due in June, may also be playing on their minds. But one also could interpret this as being something of a ‘rabbit in the headlines’ syndrome with no one quite knowing what to do next. One thing is certain currency dealers seldom reward apathy and often an inability to react to market trends results in sharp currency depreciation. We also need to consider if the advent of the Euro is ever going to turn its zone of influence into another US style economy. If it does then the economic geography of the EU is about to undergo a significant change. Integration must surely result in leaner and more efficient business within the EU and with national or possibly regional specialisation. The extent to which a considerable pool of cheap and enthusiastic labour will drive down costs remains to be seen but the EU population movements could emerge as part of a rival major economic structure to the Hispanic invasion that is driving much of the growth in the US. It is interesting to note how few registered jobs the US economy is creating each month and one wonders if that is partly caused by the low paid jobs being taken by illegal immigrants! But back to Europe and it’s less than warm relationship with macro policy. It is interesting to note that Bush has gone for a quasi Keynesian approach of tax cuts and a hope that the multiplier effect will be both quick and large. Within the EU such a move is either not possible or not wanted. The US has added some other weapons to its economic armoury in a historically low interest rate and a low valued dollar. In short, a period of economic nationalism is in place and it’s not simply a ploy for election year. What has happened is an introductory lecture on how to boost economic activity within an economy but no one is mentioning inflationary pressures! If these do arise they will be after the election and might even be someone else’s problem to solve. One fact on which most commentators agree is that Europe is losing out to the macro policy of the US and it seems confused as to how to react to this. It seems unlikely that the central authorities will spend reserves to boost the Euro; though the Japanese have been very active in the market in recent months trying to keep the Yen from surging in response to the low dollar. No, those pulling the levers in Brussels and Frankfurt seem content to turn a little further on in their basic economics text and hope that expensive exports will be offset by the benefits of cheaper imports. If exports are to grow then it will be the result of world growth and that requires the US and China to be left alone to sort out their problems in their own way. Perhaps this reaction is based on a belief that all is well with a one size fits all approach to European monetary policy? If so, then some of those responsible for economic planning must raise a concern that the system designed to move smoothly into a twelve nation currency zone has within it some serious problems? Some US economists do describe Europe as a market that has reached saturation and will not record high growth rates again. Whatever the political risks they see the Far East as the area into which US capital should flow and believe that external policy should be directed at supporting this. Added to this they consider Europe to be the consequence of an ageing population, whose zeal for capitalism has declined. It is not difficult to understand why the Tiger Economies attract such attention. Perhaps only the very basic economies of the EU, for example Bulgaria and Romania will see capital flows from New York etc?. Elsewhere, some US-based investors point to regulations and social market features as restricting their desire to invest in Europe. It appears that economics and its content are changing and Europe, including the UK needs to watch very closely and note who is driving what and why.