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What has Labour done?

There are several points that should be made in reply to Diane Coyle’s letter (Letters, 10 August). First, as I made clear in my article, I was fully aware that increases in Government expenditure were to be announced. How could I not be? Nothing in recent times has been more signalled. And, believe me, I welcome the increases. But, as Coyle must surely know, this is 'catch-up' expenditure, and the point is whether the increases were significant enough to repair the damage of the last twenty years. Even assuming that all the money is spent, and it is quite unclear how a privatised transport industry can or will spend money required of it in the absence of much stricter political direction, public funding will remain – in my view – much too low. The squeeze on public finances, which the announced increases only to some extent correct and which has been remorseless under the present Chancellor, was wholly unnecessary and has done serious damage to the country’s social infrastructure. I am also fully aware that the Chancellor has increased taxation. But if we are to raise public expenditure to appropriate levels, he will have to increase taxes further, or borrow, and I would be surprised if he did either. I hope Coyle is right when she says that the present increases are proof against recession, but I would not bet on it.

Second, the gap between rich and poor, Coyle demurely notes, 'widened' in the 1980s and 1990s. That is one way of putting it. In Britain, as in other English-speaking countries, income inequalities are now at late 19th-century levels, and such inequalities have consequences. This country, for example, has a degree of infantile and juvenile poverty, both economic and cultural, which would have shocked our political élite thirty years ago. Such deprivation is, of course, partly beyond direct government intervention, but the principal reason for it was the progressive withdrawal of various forms of income support under the Conservatives and changes in the labour market. I repeat what I said before: it would be better to give large unconditional amounts of money to the 'work-poor' than continue the half-hearted and increasingly conditional policies now being followed.

Coyle notes that the Government imposed a windfall tax on the privatised companies as a way of 'reducing unemployment'. But that tax was not designed to reduce unemployment, at least as that phrase is normally understood. It was designed to finance the New Deal; and the New Deal was designed to get people off the unemployment registers into a programme which is part work and part training in the hope that its graduates will then find permanent employment. I was in favour of the tax and am sympathetic to the aims of the New Deal. But I am sceptical as to its efficacy. It is underfunded and too narrowly focused: the problem is much wider. I doubt that it would survive any serious weakening of the labour market. Few such programmes do.

Third, inflation. The effects of inflation vary. Some people do well, others badly. How they cope depends on how far they can protect their real incomes. The poor protect them badly because they are already poor – and the government of the day may compound their difficulties. It is historically false to assume that inflation is, as it were, politically neutral. More important, however, is that one of the best ways of making people poor is to make them unemployed, and one of the best ways of doing that is to put anti-inflationary policies ahead of all others. At present, in determining minimum lending rate – now the main instrument of monetary policy – the Monetary Policy Committee of the Bank of England is obliged to concern itself primarily (though not exclusively) with the likely rate of inflation. We have so far been shielded against the employment consequences of their actions because the economy is generating a larger number of part-time jobs in the tertiary sector than it is losing full-time ones in manufacturing and because we can fund the current account deficit. If either of these ceases to be the case, and monetary policy remains the same, we are in for trouble. And the exchange rate of the pound seems not to be a matter of much concern to the Treasury.

One final point. I am struck by the historical innocence of Coyle’s letter. She writes as if the 'consensus' now apparently reached by the majority of economists is in some way new. That is not so. The kinds of policy that Coyle espouses – policies almost invariably called 'prudent' – are as old as political economy itself. I would guess that in 1931 the majority of economists were urging the wisdom of more or less the same policies. Rigidly orthodox they may not be; orthodox they certainly are. Whether such a consensus exists depends, I suppose, on which economists you have lunch with. As far as the policies of the present Government go, I know of no such consensus.

I think Chris Purnell has rather misunderstood my argument. I was not saying that the Government has no achievements. That would be absurd. I argued that as a result of the timidity of its programmes and its extreme reluctance to excite opposition, the majority of people in practice would find it hard to name anything the Government has done. That is no doubt unfair on the Government, but it is also the case.

Ross McKibbin
St John’s College, Oxford

There are several points that should be made in reply to Diane Coyle’s letter (Letters, 10 August). First, as I made clear in my article, I was fully aware that increases in Government expenditure were to be announced. How could I not be? Nothing in recent times has been more signalled. And, believe me, I welcome the increases. But, as Coyle must surely know, this is ‘catch-up’ expenditure, and the point is whether the increases were significant enough to repair the damage of the last twenty years. Even assuming that all the money is spent, and it is quite unclear how a privatised transport industry can or will spend money required of it in the absence of much stricter political direction, public funding will remain – in my view – much too low. The squeeze on public finances, which the announced increases only to some extent correct and which has been remorseless under the present Chancellor, was wholly unnecessary and has done serious damage to the country’s social infrastructure. I am also fully aware that the Chancellor has increased taxation. But if we are to raise public expenditure to appropriate levels, he will have to increase taxes further, or borrow, and I would be surprised if he did either. I hope Coyle is right when she says that the present increases are proof against recession, but I would not bet on it.

Second, the gap between rich and poor, Coyle demurely notes, ‘widened’ in the 1980s and 1990s. That is one way of putting it. In Britain, as in other English-speaking countries, income inequalities are now at late 19th-century levels, and such inequalities have consequences. This country, for example, has a degree of infantile and juvenile poverty, both economic and cultural, which would have shocked our political élite thirty years ago. Such deprivation is, of course, partly beyond direct government intervention, but the principal reason for it was the progressive withdrawal of various forms of income support under the Conservatives and changes in the labour market. I repeat what I said before: it would be better to give large unconditional amounts of money to the ‘work-poor’ than continue the half-hearted and increasingly conditional policies now being followed.

Coyle notes that the Government imposed a windfall tax on the privatised companies as a way of ‘reducing unemployment’. But that tax was not designed to reduce unemployment, at least as that phrase is normally understood. It was designed to finance the New Deal; and the New Deal was designed to get people off the unemployment registers into a programme which is part work and part training in the hope that its graduates will then find permanent employment. I was in favour of the tax and am sympathetic to the aims of the New Deal. But I am sceptical as to its efficacy. It is underfunded and too narrowly focused: the problem is much wider. I doubt that it would survive any serious weakening of the labour market. Few such programmes do.

Third, inflation. The effects of inflation vary. Some people do well, others badly. How they cope depends on how far they can protect their real incomes. The poor protect them badly because they are already poor – and the government of the day may compound their difficulties. It is historically false to assume that inflation is, as it were, politically neutral. More important, however, is that one of the best ways of making people poor is to make them unemployed, and one of the best ways of doing that is to put anti-inflationary policies ahead of all others. At present, in determining minimum lending rate – now the main instrument of monetary policy – the Monetary Policy Committee of the Bank of England is obliged to concern itself primarily (though not exclusively) with the likely rate of inflation. We have so far been shielded against the employment consequences of their actions because the economy is generating a larger number of part-time jobs in the tertiary sector than it is losing full-time ones in manufacturing and because we can fund the current account deficit. If either of these ceases to be the case, and monetary policy remains the same, we are in for trouble. And the exchange rate of the pound seems not to be a matter of much concern to the Treasury.

One final point. I am struck by the historical innocence of Coyle’s letter. She writes as if the ‘consensus’ now apparently reached by the majority of economists is in some way new. That is not so. The kinds of policy that Coyle espouses – policies almost invariably called ‘prudent’ – are as old as political economy itself. I would guess that in 1931 the majority of economists were urging the wisdom of more or less the same policies. Rigidly orthodox they may not be; orthodox they certainly are. Whether such a consensus exists depends, I suppose, on which economists you have lunch with. As far as the policies of the present Government go, I know of no such consensus.

I think Chris Purnell has rather misunderstood my argument. I was not saying that the Government has no achievements. That would be absurd. I argued that as a result of the timidity of its programmes and its extreme reluctance to excite opposition, the majority of people in practice would find it hard to name anything the Government has done. That is no doubt unfair on the Government, but it is also the case.

Ross McKibbin
St John’s College, Oxford

I suppose it is an accolade that Millbank thinks enough of the LRB to sponsor some communications in rebuttal of the mild criticisms of the Government made by Ross McKibbin. However, the Flett Socialist Instant New Labour Rebuttal Unit is ever at hand as well. Diane Coyle writes of Gordon Brown’s ‘huge increases in public spending’. In fact, the increases restore spending levels to those of the last Government but even Major didn’t have the cheek to hand over huge sums of public cash to fat cat companies through PFI/PPP schemes, which is what Brown means by public spending.

Keith Flett
London N17


Don’t fence me in

If Reviel Netz is to be believed (LRB, 20 July), either American cattle are pathetic powder-puffs or American barbed wire has magical powers. I've seen half a dozen steers crash through a six-strand barbed-wire fence as if it were a spider's web. As for the contention that in Australia wild animals were exterminated simply by fencing off water sources, I have no idea what wild animals he's talking about. Kangaroos will go over the top, or barge through; wombats will burrow underneath or barge through. Pretty well everything else that can't fly is small enough to wriggle under or hurdle the bottom strand of a fence without risk of decapitation. I've tried to stop possums from entering my roof space through a small gap by stuffing it with coils of barbed wire, only to end up with furry and bloody barbed wire and a roof space full of possums.

Peter Best
Sydney


What if they start saving?

While I entirely agree with my old colleague Wynne Godley's analysis of the factors making for recession in the US (LRB, 6 July), there is one possibility he neglects. A Bush Administration would cut taxes and increase military expenditure, enabling consumers to go on spending while reducing their indebtedness, and moving the Federal Government into deficit. This would, ironically, provide the same unintended Keynesian stimulus to the US economy as Reagan's policies of the 1980s.

Michael Stewart
London NW3


A Quick Toboggan

When I first heard, in Cambridge around 1970, a version of the ‘I can’t think why everybody calls him Queenie’ story about F.R. Leavis, the observation was attributed to Nevill Coghill, and not, as Christopher Hitchens has it (LRB, 10 August), to an academic at Columbia University. In those days the story was told either as evidence of Coghill’s unworldliness, or of the failure of Leavis to be taken seriously beyond his circle of Cambridge acolytes and the pages of Scrutiny. I can’t remember now. Of course, it might just have been a joke.

Max Smith
Uzès, France

‘When love congeals/It soon reveals/The faint aroma of performing seals’ was not written by Cole Porter, as Christopher Hitchens states, but by Lorenz Hart, and it comes from one of his many collaborations with Richard Rodgers, ‘I Wish I Were in Love Again’. My sudden loss of spirits on encountering this solecism might best be described as ‘a quick toboggan when you reach the heights’ (Hart again).

Timothy Knapman
Weybridge, Surrey


Said, Foucault, Sartre

Steven Maynard and Michael Payne (Letters, 20 July) rush needlessly to Foucault’s defence. First of all, Payne seems unable to distinguish between ‘philo-semitism’, which I never discussed, and the strong, indeed unconditional support for Israel given by both Sartre and Foucault. It was that support I commented on (without placing a ‘blot’ on either’s reputation) and which, given their views on similar issues (Algeria and Vietnam, for instance), struck me as remarkable. Israel is a state, after all, and many of its citizens, as well as Jews elsewhere, have been very critical of its policies towards the Palestinian people. Sartre and Foucault were not, and I ventured to suggest that that was uncharacteristic of both.

Second, I said I simply didn’t know whether Foucault left Tunisia because he was deported for homosexual activities or because of his feelings about the anti-Israel riots there in 1967-68. Payne mentions two recent biographies that refer, he claims, to neither possibility. In fact, Didier Eribon in Michel Foucault (1991) says that Foucault was an ‘undesirable’ in the country, and adds that he refused to return after home leave in France. David Macey in The Lives of Michel Foucault (1993) discusses the matter on several pages, but on page 205 specifically speaks of ‘police surveillance’, warnings etc: by October 1968, he says, ‘it was obvious that it was not possible’ for Foucault to stay in Tunis. And he didn’t. A third biographer, James Miller, discussed the matter with me while preparing his own book. As for the ‘gossip’ Steven Maynard refers to, it was from a professor of philosophy in Foucault’s department who is referred to by his biographers. I repeat that I still have no way of knowing which of these versions is correct. And I wasn’t making any ‘connections’ between Foucault’s homosexuality and ‘Middle Eastern politics’. It just happens that two writers I knew and admired, Foucault and Genet, had strikingly different attitudes towards the Palestinians.

Edward Said
New York


Hot Buttered Toast

Stuart Pierson (Letters, 10 August) found an echo of Henry Green’s remark about toast and cunty fingers in Hanif Kureishi, but a better source for the remark is Green’s Paris Review interview (1958) in ‘The Art of Fiction’ series, where the novelist told the interviewer: ‘I got the idea of Loving from a manservant in the Fire Service during the war. He was serving with me in the ranks and he told me he had once asked the elderly butler who was over him what the old boy most liked in the world. The reply was: “lying in bed on a summer morning, with the window open, listening to the church bells, eating buttered toast with cunty fingers.” I saw the book in a flash.’ Incidentally, a poem of Craig Raine’s also raids Green’s pantry.

Alistair Stead
University of Leeds


Prada Queen

Elaine Showalter’s discussion of trends in shopping (LRB, 10 August) repeats a current journalistic fallacy in referring to the ‘losses’ suffered by the Marks & Spencer chain. There must be many dot.com businesses which would envy M&S’s annual profit of more than £500m.

Richard Storey
Kenilworth