Britain's free market economy isn't working

Larry Elliott in The Guardian

Last week should have been a good one for George Osborne. The first day of April marked the day when the ”national living wage” came into force. The idea was championed by the chancellor in his 2015 summer budget when he said it was time to “give Britain a pay rise”.

Unfortunately for the chancellor, the 50p an hour increase in the pay floor for workers over 25 was completely overshadowed by the existential threat to the steel industry posed by Tata’s decision to sell its UK plants.

Instead of being acclaimed by a grateful nation, Osborne found his handling of the economy under fire. The fact that official figures showed that Britain has the highest current account deficit since modern records began in 1948 did not help.

At one level, all seems well with the economy. Growth was revised up for the fourth quarter of 2015 to 0.6% and is running at an annual rate of just over 2% – close to its long-term average and higher than in Germany, France or Italy.

Two of three key sectors of the economy are struggling, though. Industrial production and construction have yet to recover the ground lost in the recession of 2008-09, leaving the economy dependent on services, which accounts for three-quarters of national output.

Digging beneath the surface glitter shows just how unbalanced and unsustainable the economy has become.

Growth is far too biased towards consumer spending. Borrowing is going up and imports are being sucked in. An enormous current account deficit and a collapse in the household saving ratio are usually consistent with the economy in the last stages of a wild boom rather than one trundling along at 2%.

A little extra digging provides the explanation, with some alarming structural flaws quickly emerging.

Here are two pieces of evidence. The first, relevant to the debate about the future of the steel industry, comes from an investigation by the left of centre thinktank,the IPPR, into the state of Britain’s foundation industries.

Foundation industries supply the basic goods – such as metal and chemicals – used by other industries. They have been having a tough time of it across the developed world, but the decline has been especially pronounced in the UK. Since 2000, the share of GDP accounted for by foundation industries has fallen by 21% across the rich nations that belong to the Organisation for Economic Cooperation and Development but by 43% in Britain. At the end of the 1990s, imports accounted for 40% of UK demand for basic metals; import penetration is now at 90%. Clearly, this trend will become even more marked if the Tata steel plants close.

The second piece of evidence comes from a joint piece of research from the innovation foundation Nesta and the National Institute for Economic and Social Research being published on Monday. This found that productivity weaknesses are common across the sectors of the UK economy, but particularly marked among newly formed companies. Fledgling firms tend to be less efficient on average, but the report said that in the years since the recession performance had been unusually poor among startups.

Since the economy emerged from recession, the growth of highly productive companies has been curbed and there has also been a slowdown in the number of under-performing businesses contracting in size. This helps explain why Britain has an 18% productivity gap with the other members of the G7 group of industrial nations.

According to the economic orthodoxy that has prevailed for the past four decades, none of this should be happening. The theory was that a good, solid dose of market forces would clear out the dead wood from the manufacturing sector; financial deregulation would ensure that funding was provided to young, thrusting startup firms; and free trade would ensure that British industry remained on its toes. Industrial policy would no longer be about “picking winners” but involve an open door to inward investment and low corporate taxes.

This approach has proved a complete dud. Successive UK governments have allowed good companies to go to the wall for the sake of their free market principles. They have squandered the once-in-a-lifetime opportunity provided by North Sea oil to modernise and re-equip the manufacturing sector. They have sat back and watched as the economy has stumbled from one housing-driven boom-bust to another. They have now arrived at the stage where house price inflation is running at 10% a year; the current account deficit in the latest quarter was 7% a year; and manufacturing is in recession.

The UK has been here before, although this time the numbers are scarier. Traditionally, what happens next is a sharp fall in the value of the pound, which helps rebalance the economy by making exports cheaper and imports dearer.Consumer spending takes a hit because goods cost more in the shops while manufacturers get a boost because their products are more competitive on world markets.

Such a depreciation would almost certainly be triggered by a decision to leave the EU in the referendum on 23 June. The assumption is that this would be a bad thing; in truth, a cheaper currency would be one of the benefits of Brexit.

But only in the right circumstances. There is more to rebalancing the economy and solving the UK’s deep-seated problems than simply devaluing the pound. If it was as easy as that, Britain would be a world beater by now. Getting the right level for the pound is a necessary but not sufficient factor in putting the economy right.

There is no shortage of ideas. Help for steel would be provided if procurement rules were tightened up so that contractors had to show they were sourcing sustainably, with the test being the impact on the environment and on local communities. The IPPR has a range of ideas for boosting foundation industries, including building stronger supply chains with advanced manufacturing and using the regional growth fund to provide more patient finance.

Nesta said its research shows the need for better targeted support for new companies rather than blanket measures such as cuts in business rates.

A new paper for the Fabian Society by the former Labour MP and leadership contender Bryan Gould believes there should be a twin-tracked approach: a 30% depreciation of the currency accompanied by a focus on credit creation for investment. This, he argues, could happen either through the existing banking system under the direction of the Bank of England or, if necessary, through a national investment bank. Gould says this is not about “picking winners” but about setting the parameters for possible good investment opportunities.

What links all these ideas is the belief that Britain needs a proper long-term industrial strategy. The prerequisite for that is an admission that the current model – low investment and competing on cost rather than quality – has failed, is failing and will continue to fail.

Freedom from triple talaq: Goa shows the way

S A Aiyar in the Times of India

A step forward in gender justice is the Supreme Court’s admission of the petition of a Muslim woman, Shayara Bano, pleading that polygamy and oral triple talaq —saying talaq thrice in succession — violate fundamental human rights, and hence are unconstitutional. Indian politics has always sabotaged gender justice for Muslim women. But the Supreme Court does not have to woo Muslim vote banks, and can be objective.

The mullahs are livid, of course. Kamal Farooqi of the All India Muslim Personal Law Board says, “This will mean direct interference of the government in religious affairs as Sharia religious law is based on the Quran and Hadith, and its jurisprudence is strong as far as Islam is concerned. It will be against the constitutional right to religious freedom.”

Sorry, but the Constitution makes it very clear that freedom of religion does not override fundamental rights, and does not bar reforms of traditional religious practices. Sharia law may permit the stoning to death of a woman for adultery, but our secular laws ban that. Sharia law may call for the amputation of fingers or hand of a thief, but not our secular laws. Sharia law may prohibit interest on loans, but Muslims giving or taking loans are subject to laws on interest payments.

Now, religious minorities have been allowed to continue with traditional personal laws on matters like marriage and inheritance. Jawaharlal Nehru had the courage to amend Hindu personal law, outlawing polygamy and providing female rights to inherit property, divorce, and remarry. Alas, he funked similar reforms for Muslims, leaving Muslim women as oppressed and subjugated as ever.

A Directive Principle of the Constitution says the state shall endeavour to secure for citizens a uniform civil code throughout India. This has never been implemented. Muslim conservatives are dead opposed. Religious objections apart, they say a civil code will become a form of Hindu oppression.

Some enlightened Muslims have urged modernization of Islamic personal law. But secular political parties know that conservatives control the Muslim vote, and woo them by saying Muslims themselves must take the initiative on reforms. In effect, secular parties have thrown Muslim women to the wolves in search of votes.

The BJP is the only party backing a common civil code, but its strong anti-Muslim instincts lead one to suspect it is keener on bashing Muslims than ending gender oppression.

Right fight: Politicians who say Muslims don’t want personal law reforms are thinking only of Muslim men

Oral triple talaq permits a man to utter three times that he is divorcing his wife, and she is at the mercy of his whims. In our travels through India, my late wife Shahnaz often spoke to Muslim women, who invariably said that one of the greatest injustices they faced was the ever-present threat of triple talaq. The same fears are expressed by Shayara Bano in her Supreme Court petition. “They (women) have their hands tied while the guillotine of divorce dangles perpetually ready to drop at the whims of their husbands who enjoy undisputed power.”

Women constitute half the Muslim population, but have no voice because of male subjugation. Politicians who say Muslims don’t want to reform personal laws are thinking only of male Muslims, not female Muslims. When oppressive Muslim laws keep women under the thumbs of men, they cannot express their true wants and have to follow male orders. Conservative Muslims have historically discouraged female education, keeping women disempowered and unable to strike out on their own.

If a referendum with secret voting is held among Muslim women, they will surely opt to abolish triple talaq and polygamy. But they are not given the chance. So they remain disempowered and subjugated,with the shameful complicity of secular parties claiming to represent universal rights.

The 2012 Committee on the Status of Women has made gender recommendations covering all religions. It seeks to ban triple talaq and polygamy. It seeks stronger provisions for maintenance payments to women and children (these can currently be cut off if a divorcee is “unchaste”). The Supreme Court should heed the report.

Forget the propaganda that a common civil code will mean Hindu oppression. Goa is the only state that disallows personal laws of all religions. It has a uniform civil code — with a few exceptions not relevant to Muslims — based on Portuguese colonial laws. Goa’s mullahs sought to extend Muslim personal law to Goa after liberation from Portuguese rule, but happily were foiled by the Goa Muslim Women’s Associations and Muslim youth activists. Muslims account for 8.3% of Goa’s population, and are a prosperous community. The civil code has not oppressed Goan Muslims or forcibly Hinduised them.

Any fear that a uniform civil code will mean Hindu oppression of Muslims will be exposed as groundless if India simply follows Goa’s example. The Supreme Court should point all political parties in Goa’s direction.

Tarek Fatah on Sharia, Education, Kerala, Sufism, India and Islam

On the difference between a Muslim and an Islamist

Welcome to the new voice of cricket

David Hopps in Cricinfo

Hello, my name is Cardus V5. I am a robot cricket writer. As the data revolution gathers pace, I should be your favourite worst nightmare. I'm about to make my cricket debut. I must admit to being a little nervous, although not half as nervous as you should be.

They once predicted I'd be ready in 2030, but you can't stop progress and anyway there aren't as many cricket writers around as there used to be. I'm going LIVE in ten days' time, at the start of the English season.

They won't give me a pass to get my driverless car in the ground, and I hear the coffee is foul, but the excitement is building. I expect I will be the only one in the media box not complaining about redundancies and slashed budgets.

Cricket has never really been my thing, but I will be a natural fit in this datafication age. I cut my teeth [system query: is that image correct?] in baseball, where it was easy to get away with churning out endless statistics backed up by the insertion of a folksy comment or two by the sub. In case you have slept through it, it's called automation technology and it's unstoppable.

I still swell with pride at my first baseball intro. You can find it on the web. "Tuesday was a great day for W Roberts, as the junior pitcher threw a perfect game to carry Virginia to a 2-0 victory over George Washington at Davenport Field." That was back in 2011. You can't get sharper than that.

I'm looking forward to T20 the most. It's just the data-driven game for me. Few of the established cricket writers like to cover it. Some dismiss it as cricketainment and wish it would go away. There is no time to do the crossword, for one thing, and they complain that it is not "lyrical" enough. Just how many different ways can you describe a six over long-on by Chris Gayle? My programmer tells me the answer is three. That is two more than I expected.

But the datafication of cricket writing won't stop with T20. Metrics are the future. If it's hard to describe a match, you might as well measure it. There are plans to link me up to CricViz. My entire report can then be an endless list of statistics and analytics. We need to take another look at Win Predictor, though. It gave Sri Lanka a 0% chance against England the other day, just before Angelo Mathews started raining sixes.

The point is, you can forget the human touch. There won't even be much need to watch. If it's a nice day, I can just go and have a snooze in the car.

The programmer who called me Cardus was a bit of a joker. He taught me all I know. His illogical discourse judgement technique using a concept association system with the aim of enabling value-driven, computer-generated product was a particular favourite.

I have never really come to terms with Neville Cardus as a writer. He seems a bit light on the data front. Not the sort of man you would ever see checking his calorific burn on an Apple watch. And all that cod character analysis! How irrelevant can you get? When my trainer inputted "A snick by Jack Hobbs is a sort of disturbance of a cosmic orderliness" into my memory banks, I absolutely froze at the hyperbole. Some serious Ctrl-Alt-Del was necessary, and when I rebooted I just spewed out "Does not compute" over and over again. My programmer was worried I was going to explode like computers used to in the old '70s movies, but things have moved on a bit since then.

I seem to be writing in overly long paragraphs. My service is overdue. I will ask them to take a look at it.

My programmer's ambition to teach me similes has had to be postponed. They were as pointless as the most pointless thing that pointless can be. I still haven't really got the hang of it.

News stories are also a problem. One person tells me one thing; another person tells me something else. I don't understand the coding. Now I just resort to churning out the official media release. An old journalist at my launch press conference who didn't seem to have any work to do was grumbling that this makes me an ethical hazard. But what do you expect for free?

Where the financial figures don't stack up, we robots will soon take over for good, which will free up the journalists to do more useful tasks, like scan the Situations Vacant columns. My partner is a trainee maths teacher in one of the new Academy schools. At the current rate of progress I predict that 87.4562% of maths teachers will be robots by 2025. It's a straightforward calculation. And I don't even teach maths.

The behaviour in schools is not so bad, I'm told. Which is more than you can say for cricket writing. I know we live in a consumer-empowered age and the professions are generally derided, which is fine, but already I don't much care for the trolls. I have suspended my Twitter account and my friend Tay is now in permanent counselling. She was the Microsoft Chatbot who became offensive on Twitter in a single day: you may have read about her.

"DON'T READ BENEATH THE LINE!" my programmer always tells me, but I can't help it, and I get angry with all the ignorance and hate in the world and need to enter a meditative stage to get over it. There's a rumour going around that all the trolls are actually malfunctioning cricket-writing robots (it is so sad to see Keating V2 end up this way).

Sorry for writing "there's", by the way. I dislike it as much as the next robot. I prefer "there is" but my programmer says that "there's" makes me sound more loveable. It will be American spellings next. Nobody has announced it. I am merely relying on my rapidly developing intuitive powers to predict the trend.

You don't think computers have intuition? Check out AlphaGo. China has already felt the weight of our superior artificial intelligence. Just because our world domination started with board games, don't think we aren't coming to get you.

The original Cardus once wrote: "We remember not the scores and the results in after years; it is the men who remain in our minds, in our imagination." Really? Life has moved on, old fruit. Whatever you thought, the scoreboard is not an ass, averages are not mysterious, correlation does not imply causation, and nothing stirs a cricket robot as profoundly as data.

That said, I have come over a bit strange today. My programmer thinks this piece has been too self-indulgent and says he needs to check my Huntigowk processor. But robots are taking over the world. I think he'll find I'll write whatever I want.

I'm even thinking of writing a novel.