29 May 2004


Paul Anderson, Tribune column, May 30 2004

I have a confession to make. Over the past few months, I’ve become an increasingly avid reader of news stories about the housing market. I know it’s a terrible thing to do, and I feel guilty and embarrassed about it. But I just can’t stop. Every day I nervously scour the pages of the newspapers for the latest news on house prices and the latest predictions of what’s going to happen to them in the next 12 months.

The reason my habit started is simple. Like more than two-thirds of households in England and Wales, I am what is known as an owner-occupier. In fact, I don’t own a lot: a couple of years ago I borrowed a large amount of money from a mortgage company to buy a small house, and I still owe the mortgage company most of it. But the boom in house prices since I took out the loan means that if I sold up tomorrow I’d have a tidy sum left over after I paid it off — more than I make in a year from working, as it happens.

If the housing market continues to boom, I’m in clover and the drinks are on me. I’ve got a bit of capital I can borrow against to buy a sports car, a conservatory, some designer consumer electronics or, more likely, a new kitchen for her indoors. Or I could simply cash in the profit — take a couple of years off work, finish the book I’m writing, travel the world (though of course I’d also then have to find somewhere else to live, and I’m not quite sure how the family would survive). But if the market crashes, bang goes the credit and bang go all those dreams of la dolce vita. In fact, I could be completely stuffed, particularly if interest rates go up, with a giant millstone of debt hanging round my neck . . .

OK, I’m exaggerating. In truth, I’m rather cautious. I don’t really believe that my two-up, two-down in Ipswich is worth what the estate agents say, and I’m not gambling on the housing market (not least because I don’t really want to put my nearest and dearest on the streets).

Unless there’s a world economic crisis of some kind, I can’t see interest rates hitting the point at which my mortgage payments become impossible to pay. And I actually think the best thing would be for house prices to fall, because as they are at the moment only the very affluent (or those with well-off and generous parents) have a hope of getting somewhere decent to live in much of Britain.

But there is a serious point to this. The fact that house prices are massively inflated is probably the most important factor in the British economic equation right now. It’s the main reason for the continued buoyancy of consumer spending, which has played a key role in keeping overall demand in the economy at a level that has pushed unemployment to its lowest level in decades. It’s the main reason Britain is generally feeling pretty good about itself, the main reason that Gordon Brown has retained a reputation for being a good manager of the economy, the main reason Labour is still likely to win the next general election even if it gets a kicking in the European and local elections in a fortnight.

It’s also, however, the biggest problem now facing the British economy. The reason house prices have gone through the roof is that demand for housing has consistently exceeded supply at a time when interest rates are low and seem unlikely to rise dramatically because inflation is low elsewhere in the economy. But it is almost inconceivable that we are not experiencing a classic bubble, rather like the one in the late 1980s. Sooner or later, probably sooner, it will come to an end.

The Bank of England wants to achieve a “soft landing” by putting up interest rates just a little every month until house-price inflation fizzles out, but its strategy is by no means guaranteed success. House-price bubbles are notoriously liable to burst. The last one did, pushing countless mortgage-holders in the early 1990s into negative equity and a significant minority into repossession or even bankruptcy.

Hunch says that if this bubble goes the same way, the impact will be worse, for the simple reason that so much more consumer credit is riding on house prices than was 15 years ago. A 30-40 per cent fall in house prices today — unlikely across the board, but it’s what happened in some areas of London and the south-east during the early-1990s property-price slump — would destroy the sense of self-satisfied prosperity that has characterised Britain, or at least that two-thirds of the population who are in on the act, over the past decade and more. Even a 20 per cent fall, much touted by market analysts, would wreck Labour’s chances of re-election as dramatically as the fiasco of sterling dropping out of the exchange rate mechanism of the European Monetary System destroyed the Tories.

All in all, I’m glad I’m not in Brown’s shoes right now. Though maybe I’d be thinking that the best way out is to engineer a little coup d’etat for the big job and install some no-mark klutz — say Jack Straw? — to take the flak as the housing market collapses . . .

13 May 2004


Paul Anderson,Tribune column, May 14 2004

First things first: the pictures of American troops humiliating Iraqi prisoners in the Abu Ghraib prison — which the US administration admits are not isolated incidents of abuse even though it denies there was a policy of torture — are utterly disgusting and shaming. And the substantiated reports that British troops also systematically mistreated prisoners, though not generally as badly, are a disgrace. There can be no excuse for such brutality. It is irrelevant that Saddam Hussein presided over much more and much worse torture, or indeed that most of the Arab regimes that have expressed horror at the Abu Ghraib pictures are hypocrites. Torture is wrong, full stop.

And it is not enough that George Bush, Donald Rumsfeld, Tony Blair and Geoff Hoon have apologised, or that the US soldiers caught committing vile acts on camera are in the process of being court-martialled, or that the British authorities in Iraq apparently stopped hooding prisoners last year after the Red Cross complained. It is essential that the extent of official encouragement of and acquiescence in ill-treatment of prisoners is investigated, exposed and righted. The process must take in training programmes as well as orders on the ground in Abu Ghraib. It must encompass prison regimes in Guantanamo Bay and the US itself as well as in Iraq. And it must hold to account not only those who actually did the torture but everyone who knew about it and did nothing — both in the armed forces and among politicians.

It does not follow, however, as many on the Left have argued, including Tribune, that coalition troops should be withdrawn at once from Iraq. Yes, the past fortnight’s disgusting revelations have done massive damage to the credibility of the claim that the occupation is bringing democracy and human rights to Iraq. Yes, Iraqi opnion appears to have turned against the occupation (though the hard evidence is a single opinion poll). Yes, that in itself makes it more likely that the US and its allies will withdraw their troops in the not-too-distant future.

But getting out right now would only make matters worse.

The presence of the coalition troops remains essential, for a few more months at least, if the current mess in Iraq is not to become a total disaster. If there is to be any chance of implementing the coalition plan for setting up an interim Iraqi government at the end of June and then holding elections, Iraq first of all needs security. And at present, like it or not, the coalition troops are the only available means of providing it.

The idea of replacing them with a United Nations force is fine in principle, but such a force could not be organised overnight, not least because the UN has no experience of running the sort of security operation that the situation in Iraq currently demands. For now, the only alternative to keeping the coalition troops in place is to let Iraq sink into bloody chaos. And that is the worst of all possible scenarios, regardless of whether you think the war to topple Saddam was right or wrong.

Which is not to say that the occupation can continue as it has done for the past year. The scandal of Abu Ghraib makes it essential that the coalition cleans up its act at once and is seen to do so. Most obviously, as well as justice being done and being seen to be done over past ill-treatment of prisoners, all use of coercive interrogation techniques must now stop, prisons must be opened up to independent international inspection and private security contractors must be reined in.

But it will not be enough for the coalition to address only the way it treats prisoners, essential as that is. It also needs to demonstrate to Iraqis that it is serious about handing over real power to them. That means making a concerted effort to get the democratic process off the ground — not just by ensuring that the UN envoy, Lakhdar Brahimi, is given every assistance in getting an interim government installed on schedule on June 30, but also by bringing forward the date for the elections, currently pencilled in for January next year, to early autumn, and by announcing a date for withdrawal of troops (say 12 or 24 months from now).

This would not guarantee a successful transition to democracy in Iraq, but it might just work — and there is precious little else that holds out any hope. Nothing other than elections can give a new Iraqi regime legitimacy; and nothing other than commitments to holding elections as soon as possible and getting the occupation over as soon as security is guaranteed can now legitimise continued occupation.

4 May 2004


Both Chris Brooke of Virtual Stoa (see link on left) and Mike Berlin tell me that, contrary to my assertion (click here) the use of the term “republic of letters” predates Thomas Jefferson by more than a century. Berlin writes:
“The ‘republic of letters’ goes back to the late 17th century, and referred to a pan-European network of intellectuals, primarily interested in shared and mutually varifiable information on natural philosophy circulating in print. I think the term is Pierre Bayle's, from his Nouvelles de La Republique des Lettres, published in exile in Amsterdam, 1684-87.

“You are however absolutely right that the original spirit of Bayle's publication and similar publications was dissident, heterodox and free from the influences of church and state. And the question of anonymity is related. Because of censorship in France, pseudonyms and clandestine or exile presses were widely used - think of Arouet aka Voltaire. But this was less of an issue in 18th-century England with its relatively free press.”