Monthly Archives: February 2008

Many years of research have convinced me of the usefulness of the following rule of thumb: if the title of a book or article makes as much (or as little) sense when you randomly permute the words in it, then that book/article is not worth reading. Examples: ‘The Silence of the Lambs’; ‘The Lambs of the Silence’ would work just as well. Or: ‘Profiles in Courage’ could easily have been ‘Courage in Profiles’.

The time-saving value of this rule came back to me as I thumbed once again recently through two books written by Barack Obama, the front runner in the race for the nomination as Democratic Party candidate in the forthcoming US presidential elections.

His first book’s title is (subtitles are too difficult): ‘Dreams from my Father’. Clearly, ‘Father from my Dreams’ makes as much sense. The second book’s title is: ‘The Audacity of Hope’.  Once again, ‘The Hope of Audacity’ makes as much sense. The vacuousness of these titles is exceeded only by their pretentiousness. I do not like them, Sam-I-am.

Two highly readable Reports on the lessons learnt from the Northern Rock debacle have been published recently. The first is the Treasury Committee Report The Run on the Rock published on January 26, 2008. The second is Financial stability and depositor protection: strengthening the framework published jointly by HM Treasury, the Financial Services Authority (FSA) and the Bank of England on January 30, 2008. The publication of this document launches a consultation on the proposals contained in it for domestic and international action to enhance financial stability. This blog will deal mainly with the Treasury Report. 

The Treasury Report covers five areas: (1) Strengthening the financial system through domestic and international actions; (2) Reducing the likelihood of banks failing; (3) Reducing the impact of failing banks; (4) Deposit insurance: and (5) Strengthening the Bank of England and improving the operation of the Tripartite Arrangement.

You have to hand it to Dr. Rowan Williams, Archbishop of Canterbury: he knows how to start a good debate. Even when he gets an issue 100 percent wrong, as he does in his February 7 lecture   and interview  on Sharia law, he at least addresses issues that matter and should engage our intellect, morality and emotions. 

In what follows, I will at times refer to British or UK law where this does not give rise to ambiguity, although I am aware that there are distinct systems of English Law, Scottish Law and Northern Irish Law, not to mention the laws of the various Channel Islands, of the Isle of Man and indeed EU law. 

Dr. Williams makes, and at time mixes up, two quite different points. The first is that different British communities (he appears to be referring only to communities based on a religious faith, rather than on, say, the support of a football team) can and should have their own legal procedures, practices, institutions and even ‘courts’, whose judgements would be enforceable through the British court system. The second is that Sharia law may contain legal principles or practices that are intrinsically worthwhile and could/should be incorporated into British law. 

I will take these two points in turn. Although Sharia law does not distinguish between civil law and criminal law, most issues involving Sharia courts and other religious courts in the UK have involved civil law matters. It would seem pretty self-evident that having community-specific criminal law and criminal courts would be an abomination of the first order. There have been stories in the media that there are ethnic-community-based or religion-based criminal ‘courts’ in the UK, and that some of these operate with the consent of the police. A Somali ‘court’ of this kind, operating in London, was the most frequently mentioned example. These may well be urban myths. If they are not, they would constitute examples of vigilantism that are utterly beyond the pale. I will focus on civil law in most of what follows.

 

I have argued on a number of occasions in this blog for the legalisation of the production and consumption by competent adults of all currently illegal drugs/substances that do not induce behaviour likely to cause significant harm to others. It should remain illegal to sell potentially harmful substances to children and the mentally incompetent. Education, regulation and, for those who succumb and regret it, treatment and rehabilitation are the appropriate drug policy of the government. But those competent adults who insist on the right to fry their brains ought not have the government stand in their way, although their friends should.

The ignorant moralists who tend to make policy in this area are, however, pushing hard in the opposite direction. Just today’s newspapers had two stories, one from the UK, the other from Afghanistan, to show that the forces of ignorance and darkness are on a winning streak.

Voting, like jury service, is a civic duty.  Unless you get a warm glow inside from doing your civic duty, it is not individually rational to vote, as the odds that your vote will matter for the outcome are just about zero. So voting should be mandatory, or at least turning up at the ballot box ought to be – the right to tick the box marked: ‘none of the above’ should also be guaranteed.  Unfortunately, only a few enlightened countries like Belgium still have mandatory voting.  The result of leaving it to individual discretion is too often a pathetic turnout rate.  Twenty percent or less of the eligible population in some European Parliament elections.  Fifty percent or less in US presidential elections.  Such poor turnouts undermine the legitimacy of whoever gets elected and of the political system that puts up with it.

So I will vote, or at least turn up to vote, in the coming US presidential elections.  Will it be any of the above?

A while ago I argued in this blog that the US might benefit from a recession, because it was highly unlikely that the fundamental adjustment required in the US economy – a substantial increase in the national saving rate – is achievable without a period of growth below potential. Others have made similar points, and not just the usual European suspects, with post-colonial chips on their shoulders and an excess of Schadenfreude whenever the US trips over a banana peel. In recent contributions to the FT, Chrystia Freeland (Canadian, I believe) and Ricardo Hausmann (Venezuelan, when last I met him) have also made the point that the US needs, or would benefit from, an early serious slowdown in economic activity/recession. As the proud owner of both a US and a UK passport (and the former owner of a Dutch passport), my motives are, of course, beyond suspicion.

Maverecon: Willem Buiter

Willem Buiter's blog ran until December 2009. This blog is no longer active but it remains open as an archive.

Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions.

Willem Buiter's website

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