Cuba and the USA

US GDP per capita $56000 per head

Cuba GDP per head $6000

 

Why do some people think dictator Castro did a good job?

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The rest of the EU is in a big muddle about Brexit

The EU officials who speak out and a few of the other member states politicians join them in expressing  great dislike of the UK and say they wish to punish us.

They also seem to want us to stay in the EU. I guess that is because they see that being made to stay in would indeed be punishment. It would mean continuing to pay all those bills, accept all their laws, and make our energy, our agriculture, our fishing  and much else ever more dependent on them.

It is a very strange club that thinks the way to keep you in is to threaten you if you decide to leave. Why don’t they think of ways of making their institutions friendlier to member state democracy, to jobs and to living standards. At least it made it an easy choice for the UK, as so much of the EU is hostile to prosperity and freedom.

The truth, O EU, is most of the UK is not scared of you and does see how we will be freer and more prosperous out of it. We do not think under global rules you can harm us, as well as seeing that the more you try to damage us the more you would damage yourselves.

The irony of the referendum and of the current position is we Eurosceptics take a positive view of other member states, whereas the pro EU people  take a negative one. Pro EU people in the UK are always warning us how the nasty EU will hurt us if we leave, whilst Eurosceptics reckon most of the peoples and governments of the EU will want to be friends and trade with us after exit. The good news for the UK is it is difficult to know how  the rest of the EU can damage us. If they want tariffs on their exports to us we can always buy elsewhere, whilst the impact on our trade to them is far less.

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Silly forecasts

The IFS claimed this will be the worst decade for real incomes. They did not stress what their figures showed, that there was a big hit to real incomes and living standards thanks to the banking collapse and the Great recession, which extended into the first couple of years of this decade, to be followed by some recovery. Nor did it go along with the OBR and stress that on their figures, which are pretty gloomy still, real incomes are estimated to rise every year from here for the full forecast period.

 

There was no reminder to the public that the October retail figures showed stonking growth at 7.1% more volume than in October the previous year. Nor did they pause to ask why retail prices were still lower this October than last October, given the substantial decline in the pound that has occurred over that time period, with much of it taking place well before the referendum. The current fashionable pessimistic forecasts say that family incomes will be squeezed by rising prices next year and the year after. This will lead to a drop in consumer spending, presumably to lower retail sales, and to a decline in economic activity. The lesser version expects a squeeze which slows the economy but which still allows some growth overall and in retail activity.

 

These forecasts usually come from  people who confidently forecast a recession this winter on the back of any vote to leave. Now they say what matters is the sending of the letter to leave, rather than the decision itself. Doubtless if and when the economy does not shrink when the letter is sent, they will shift their ground to saying it will shrink when we do actually leave.

There were two surprises in the OBR figures which suggests a few second thoughts about the alleged damage of Brexit. First, they now expect a stronger performance from the UK economy in 2016 than before the vote. Second, they expect 2.1% growth in the year they think we will leave, 2019, which is the same gr0wth rate as they forecast well before the referendum. I agree with those two forecasts.

 

The government is pledged to raise living standards, especially for the lower paid. To do so it will take more people out of Income Tax altogether, introduce universal credit which makes it more worthwhile working than the system it replaces, and boost the living wage.

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What are the negotiating aims of the EU 27?

So many commentators and broadcasters, and most Opposition politicians,  keep on and on about what are the UK’s negotiating aims. Often they misrepresent the UK’s position, both seeking to weaken it by false report and by pretending our aims are unclear or unstated. If they wanted to be helpful and do something useful they should turn their attention to the rest of the EU and their aims and positions.

 

The UK’s position is very easy to grasp for anyone who read the referendum ballot paper or has listened to the Prime Minister. The UK is going to leave the EU. There is no such thing as a single market we can remain in on leaving, and no-one on the Vote Leave campaign suggested there was. As the Uk wishes outside the EU to negotiate trade agreements with non EU countries we clearly will not be in the Customs union. The PM has ruled out EEA membership. This means there is not a lot to negotiate. We will not negotiate our independence with the rest of the EU – that is an absurd contradiction. We will offer them no new barriers to their trade with us, and I expect after a lot of huffing and puffing they will want to accept that offer. If they don’t we will trade with them as most favoured nation under WTO rules, and they will be the big losers on tariffs as a result.

So what do they want? They haven’t yet even confirmed that all UK residents legally living in the rest of the EU can carry on doing so, though the UK has made clear we are happy for all EU legally resident people in the UK to stay if they wish assuming there are no forced evictions from the continent. Isn’t it time the rest of the EU moved to reassure all those citizens? Surely civilised countries who accept international law could bring themselves to reassure people living in their counties?  Why are they so unpleasant to their residents?

Some of them have said they want the UK to continue with freedom of movement. The answer to that is clearly No. They cannot make us do that. Some have then said they wish to damage their trade with us, so they can damage our trade with them, as a punishment for daring to leave. What a ghastly club if it needs to punish members who want their freedom!  The bad joke is of course on those who make these threats. It will be their trade that suffers more, as it is their trade which will attract more of  the tariffs that can be placed on agriculture, wine, and cars whilst most of our trade will be tariff free or very low tariffs under WTO rules.

I don’ t  think in the end, with such high unemployment in the Euro area, they will want to hurt their trade. If they do, it will certainly confirm how wise we were to leave. Why would you want to stay in a club with other members who so want to harm you that they will harm themselves more to do so? Why would you wish to stay with former partners who say such disobliging things and cannot even tell their residents they are of course free to stay where they are living. Time for our journalists to ask some  questions of the 27.

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Grammar schools

John Redwood (Wokingham) (Con): There is a happy consensus well hidden in this debate. All parties in the House believe that education is of huge importance, and we all want the best possible education for every child in our country. We also accept that the state has the main obligation, because most children will need state finance and state support to secure that great education.

I pay tribute to Ministers for the fact that 1.4 million children are now being educated in good and outstanding schools. There is proof that work by successive Ministers, and, more important, by an army of heads and other teachers in state schools, is delivering better education throughout the country. However, there is still much more to do, and I hope that all the Labour Members who are so critical of current educational achievement in their own areas will work positively with their schools and local education authorities to try to achieve that better performance.

I was pleased to hear the shadow Secretary of State say that she wanted to look at the evidence, but she rather spoilt that by revealing that, although she has made grammar schools her “big thing” and tabled this motion, she has not actually visited any grammar schools since taking on the job. I think that it would have been a courtesy to the grammar schools that she is attacking to visit one or two of them before mounting her challenge today.

The Opposition’s argument is that selection is wrong because we may not select all the talented people at the age of choice, and that it is therefore unfair to give the advantage to those who are selected. Again, however, there is huge humbug on the Opposition Benches. When I asked the shadow Secretary of State whether she was upset by the fact that our elite sportspeople are usually selected at quite a young age for special training and special education, and that they are expected to achieve to a much higher level than the average and are given training and made to do extra work in order to do so, she did not seem to be at all upset.

Andy Burnham (Leigh) (Lab): That is a completely useless analogy. Education is about life. It is about the skills that people need to get through life—the basic literacy and numeracy. Sport is not about the entirety of life. That is why education is different, and that is why it is wrong for any child to be labelled second class at the age of 11.

John Redwood: The right hon. Gentleman simply does not understand. If a young person from a poor background becomes a top footballer, that is a transformational event in their life, and good luck to them. Why do the Opposition not understand that exactly the same arguments apply to art, ballet and music? We take the children who we think are going to be the most talented musicians, at quite a young age, and we give them elite special training so that they can play to the highest standards in the world.

Stella Creasy (Walthamstow) (Lab/Co-op): I am glad that the right hon. Gentleman has mentioned football. The fact is that 13% of our national football team went to private schools, which is twice the national percentage of children who go to private schools. Does the right hon. Gentleman think that that might account for the performance of our national football team, and that we might be missing out on the talent that exists in the comprehensive sector? Does he not recognise that that is precisely the problem that we are discussing today? We are missing out on talent as a result of too narrow a focus.

John Redwood: I do not think that we will get a better team by training them less, and no longer giving them any kind of elite education. I think that Opposition Members are being very obtuse.

Let me try a different argument. The Opposition’s second argument against grammar schools is that in Buckinghamshire and Berkshire, where we have some good grammar schools, all the other schools must be suffering. Opposition Members write off and write down the many excellent comprehensive schools in areas that have access to grammar school places, in a quite unrealistic and unpleasant way.

I know my own area better than Buckinghamshire. We do not have any grammar schools in my constituency, but there are two excellent grammar schools just over the border in Reading, a girls’ school and a boys’ school, which take some of our brightest and academically most gifted pupils from the Wokingham area. Our comprehensive schools in Wokingham also contain great, academically gifted children. Those children, at the top of those schools, do not have to compete with the children at the grammar, and they go on to compete very successfully and get good places at elite universities. Opposition Members should not write off those schools, or pretend that they are some kind of failed secondary modern.

I am glad that my hon. Friend the Member for Bexhill and Battle (Huw Merriman) reminded us that there are some very good secondary modern schools whose pupils achieve great things. My hon. Friend himself achieved great things before coming to the House, and some will consider it a great achievement that he is in the House now. I think that that shows that no one should write off any whole category of school. As an Opposition Member pointed out in a more honest moment, what really matters in a school is the talent of the teaching force and the good will and working spirit of the pupils. The two play off each other. That can be found in a good comprehensive, and it can be found in a good grammar school.

The Opposition must understand that we are not trying to create a series of schools for failures. We want to have great schools for everyone. We believe that selecting some pupils on the basis of academic ability and giving them elite academic training can make sense for them, but it does not write off the other schools.

Ian Austin (Dudley North) (Lab): I am not at all opposed to giving the brightest pupils an elite education. That is not why I am worried about grammar schools. I am worried about grammar schools because they do not solve the central problems that our education system faces. Michael Wilshaw has said that we have “a mediocre education system”. When it comes to the vast majority of pupils, we are falling behind out international competitors. In a modern economy in which the innovation sector is creating jobs at 30 times the rate of the rest of the economy, we need to exploit the talents of all our young people. That is why I am worried about grammar schools.

John Redwood: I opened my speech with exactly that comment. I think that that is common ground. However, selecting some people who are good at football or good at academic subjects does not prevent us from providing a good education for everyone else. If we want to have more Nobel prize winners in the future, we should bear in mind that they are likely to be attending the great universities in our country. Do we not want to feed those great universities with the best possible talent from our schooling system, and should not those talented people have been given an education that stretches them and takes them further along the road to great work before they reach the universities? The most successful people at university have often had an extremely good education beforehand. They are self-starters, and understand the importance of that.

Lucy Powell (Manchester Central) (Lab): Will the right hon. Gentleman give way?

John Redwood: I do not have time, and many other Members wish to speak.

We need to get the maximum number of talented pupils through at the highest possible level, so that they can achieve even greater things at the elite universities.

That brings me to my next problem with the Opposition’s arguments: they completely ignore the fee-paying schools. Some fee-paying schools in our country achieve enormous success academically. They have a double privilege, because they select bright pupils who also have rich family backgrounds. When the two are put together, the combination is explosively successful.

I do not begrudge people a great education if they come from a rich background. I did not come from a rich background myself, but I am grateful for the fact that those people can have a great education, and it is even better that they pay for it themselves as well as paying their taxes. I am not jealous. It must be a great problem to be against all kinds of elite education when we have those great schools with their double advantage. However, a grammar school gives people who are bright but did not come from a rich background an opportunity to compete better against the phenomenally successful elite schools in the public sector. As was rightly pointed out by the hon. Member for Walthamstow (Stella Creasy), some of our public schools dominate not only academically, but in the sporting world and in other worlds as well, which shows that their combination of resource and selection is very powerful. Surely we need more centres of excellence to which people can gain access without having rich parents.

I find it deeply disappointing that Opposition Front Benchers, having called a debate on this important subject, cannot confirm or deny that they wish to abolish the grammar schools that we have. I have one little tip for the Opposition. I was in opposition for all too many years, and I remember how difficult it was, but, as a shadow spokesman, I always found it helpful to work out my party’s position before challenging the Government on theirs. I needed to make sure that my party’s position on the topic for which I was responsible was sensible and also likely to be popular. I think that the Opposition have failed both tests today. It sounds as if the shadow Secretary of State wants to abolish the grammar schools, but does not have the courage to say so.

Let me issue a plea to the House. I ask Members to get behind the excellent grammar schools that we have, and to get behind the excellent comprehensives that we have. I ask them to understand that where comprehensives and grammars coexist, the comprehensives can do very well, and can achieve great things with their pupils. We do not have enough great schools, so let us not cripple those that we have. I certainly do not want to live in a world in which one has to be rich to go to an elite academy.

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Government plans to spend £46 bn more this Parliament

Most commentators are going on about the £23bn extra spending the Chancellor has proposed based on the spin lines out of the OBR and Treasury.

I look at the actual figures in the Green book compared to the March Budget figures.  These show that total managed expenditure will be £46.1bn higher over the  rest of this Parliament on the new numbers.  The figures are

 

Total Managed Spending     2016-17  plus £6.9bn

2017-18  plus £12.4bn

2018-19    plus £13.5bn

2019-20    plus £13.3bn

 

The largest part of this is increased capital spending. In 2019-20 for example total capital spending is up by £8.3bn.

I see I am not the only one who thinks the 2017 forecast for growth is too low. The question for the OBR is why do they think consumption and output are going to decelerate next year, after a strong performance this year which surprised them and forced them and the Bank to increase their estimates?

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Autumn Statement

The forecasts could have been worse. The OBR has now raised its forecast for growth in 2016 to 2.1%. That’s a higher figure than prior to the referendum vote. The OBR has also confirmed that it does not expect a  recession this winter following the vote to leave the EU, despite the Treasury and Bank suggestions of an early recession should the public vote us out of the EU.  It is also good to see they now forecast the same rate of growth for 2019 as before the vote, though that is the year when we  might well actually leave. So far I find myself in complete agreement with the OBR and Treasury.

Where we still disagree is over their forecast for 2017. The OBR now says growth next year will fall to 1.4%. It is difficult to see why. All the current indicators suggest an economy that will continue to grow around the 2% rate, as they forecast last March. Consumer spending  and confidence are strong. New housebuilding is accelerating. New car output and sales are good. Money and credit are growing more quickly than before the vote.

The government has decided to ignore the increased borrowing thrown up by the lower growth forecast, which is sensible of them. It has also decided to boost total public spending. This Parliament it is adding £46.1bn to the spending total, averaging around £13bn a year after this year. Much of the increase goes on capital investment, with increased spending on new homes, on road and railway lines, broadband, and hi tec, R and D and venture capital activities.

The budget judgement adds a small fiscal stimulus to the larger monetary stimulus which was happening anyway before the Bank’s injection of more bond buying.

A fuel duty freeze is paid for by a 2% increase in Insurance Premium Tax.

This Statement seeks to boost UK productivity by government infrastructure provision and by direct investment and intervention. Its success will hinge on choosing good public investments that produce a return and boost productivity, and on removing transport and communications bottlenecks for the private sector. There needs to be substantially more infrastructure investment, which will require private capital on top of the public sums identified in this announcement.

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EU political tensions

The last polls allowed before the Italian referendum point to a defeat for Mr Renzi and the government he leads. He wishes to concentrate power in a single chamber of the Italian Parliament and make it easier for him to direct reform and keep a majority in place for his proposals. He has promised or threatened to resign if the public do not back him. The idea behind his reforms is to achieve supply changes to help the Italian economy wrestle with the adverse monetary and fiscal background the Euro has delivered. Youth unemployment remains at crisis levels and general unemployment is far too high.

Meanwhile Italian banks remain at the centre of the Euro areas banking problems, with arguments over how much of the losses the bondholders and shareholders need to absorb, and how quickly the balance sheets of the weakest banks can be rebuilt. The absence of a strong government authority with clear views on how to resolve the banking troubles holds back sorting out the issues that afflict the Italian economy.

In France the centre right is close to choosing its champion for the forthcoming Presidential election. Polls and commentators take the view that either Mr Fillon or Mr Juppe will emerge as the new President, depending on who wins the run off contest for their party nomination next week-end. Current betting favours Mr Fillon. Most people expect a re run of past elections when Mrs Le Pen does well in the first round, only to lose by a substantial margin in the run off against whichever establishment candidate has emerged as the best placed to take her on in the second round.

As always I do not intend to intervene in an election in another country, and have no personal preferences on who should win. By common agreement Mrs Le Pen is likely to be an important runner in the election so I will tomorrow look at the programme she is likely to adopt for her attack on the Presidency, as this has received little attention so far in the general press. Current polls show her losing to either Mr Fillon or Mr Juppe, but polls can shift during a campaign and polls in recent elections have not been very accurate.

There are general concerns in Brussels that the current wave of support for parties critical of international treaties and supranational government could garner more support in any EU country facing an election next year.

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Spare us the foolishly pessimistic forecasts

Today the Treasury will throw in the towel over its stupidly pessimistic forecasts for the UK economy this year. I expect them to come  round to my view-and their view in March – that the UK econony will grow at least 2% this year, the fastest of the G7.

They should also recognise that next year the UK is likely to grow by at least 2% in line with their forecast of 2.2% in March.

If they persevere in wanting to be wrong, and slash their March forecast, the Chancellor should ignore the bad figures for tax and the deficit that results from any such forecast. The media should ask why the Treasury wants to compound their errors for this year with another foolish forecast.

 

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Who is against the world establishment, and why?

The left are keen to redefine the Brexit voters and the Trump voters as part of the world’s poor, left behind by the shiny new globalisation mainly left of centre governments like the US and France have brought them. They say they get it. Apparently the UK’s wish to be independent was no more than a protest vote by former steelworkers and low paid workers.If only we had left it to the civil servants, teachers and lawyers we would have got the right answer. The vote for Trump was a howl of anguish from the “Rustbelt”, a disobliging phrase used to describe swing states that voted the wrong way. Successful parts of the world were dismissed in a throw away description because one or two core industries had experienced a painful decline.

They extend this analysis to Brexit voters in the UK and AFD voters in Germany. Apparently we were all low skilled, down on our luck and uneducated. If only we had done as well at school and got to College as they did, we would not conceivably have voted the way we did.

This is of course self justifying nonsense. For every out of work steelworker who voted for Brexit there was a well qualified professional also voting for it. And why are they so scornful of the out of work steelworker, whose vote is worth the same as the lawyer and whose judgement may be better? For every low paid worker backing the AFD there is also a wide range of people who are far from struggling voting the same way. In order to get to 52% in the UK and to 48% in the USA for Mr Trump you need to do far more than mobilise the people who have lost out from globalisation.

Nor is it true to say all Brexit or Trump voters are anti all features of globalisation. Many of us are happy to work alongside talented people from other cultures, to have open borders for tourism, student exchange and business travel, to enjoy the benefits of good imports and to share technology around the world. We do not want to put the clock back to a world where there is little international trade in ideas and services.

The main features of globalisation which many dislike are the result of supra national government. There is a widespread feeling that too much is now dictated by the EU and by international Treaty. This prevents democratic engagement over our laws, and stops elected governments making changes people want.

There is also a widely held view that allowing in too many migrants year by year drives down wages, creates shortages of homes and public facilities, and changes communities too rapidly. This feeling is strong in many parts of the USA and Europe. Taking too many talented and skilled people from developing countries into unskilled work in the west also makes the economic progress of developing countries more difficult to achieve. It is related to the excessive international government, which insists on free movement to the higher paid places.

Most of the people who want a slower pace of inward migration to the US or UK are far from being racist. They do not wish to pick and choose people based on race or origins. They simply want fewer people overall. The extraordinary thing is how tenacious the elites are in trying to keep government away from people, by doing more and more through unaccountable global institutions and by treaty. As Labour implied in the UK, if the politicians do not like the way people vote in elections and referendums, then they set out to change the people. That is why both sides get so angry with each other.

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  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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