The PIIGS and one-sided equations

The good Dr North has been pointing out for some time that things in Europe are not all sweetness and light (for recent examples, see here and here). He observes that mass demonstrations are taking place with a degree of regularity in Spain and Greece as the little people give vent to their frustration at the economic mismanagement of their political masters. None of us knows what the outcome will be, nor whether it will be the same in both countries or, indeed, in any of the other countries teetering on the brink of government bankruptcy.

What troubles me is not that people are finally waking up and complaining, it is that they are complaining about completely the wrong thing. Their target is undoubtedly correct, politicians have left the PIIGS (Portugal, Ireland, Italy, Greece and Spain) deep in the mire through reckless economic mismanagement. Their complaint, however, appears not to be that their governments borrowed and wasted too much but that they do not want their governments to stop borrowing and wasting now that existing debts cannot be repaid. We see exactly the same delusionary behaviour in this country whenever the trades unions wheel out their usual rent-a-mob to bemoan a tiny bit of trimming from departmental budgets to find cash to pay the interest charges incurred by Gordon Brown's feckless stewardship of the Treasury.

I am not in the least bit surprised. Governments all over Europe have been winning elections for years by presenting one-sided equations that sound nice but do not stand up to even the gentlest scrutiny. These one-sided equations are the tool of every headline-grabbing initiative and are not restricted to the field of economic policy, we see them all the time in the field of health policy.

Smoking / drinking / one food / another food / too much exercise / lack of exercise / salt / lack of salt, or whatever is the scare of the day, is calculated to cost the NHS so-many hundreds of millions of pounds and must therefore be banned. The figures are always wrong, always grossly exagerrated, but that is beside the point; even if they were correct they only look at one side of the equation. Treating medical conditions which might not have arisen had the patient not been a smoker can be seen as a cost caused by smoking, there is nothing unreasonable in that as a general proposition. The problem is that the NHS does not exist in a vacuum and it is not funded in a vacuum, it is funded out of taxes and smokers pay taxes that others do not pay; shops and wholesalers make profits on which taxes are paid, workers in those businesses and in every stage of the cigarette production and distribution network pay taxes on their wages. The taxes gathered from the ciggy network grossly exceed even the most dishonestly overstated costs attributed to adverse consequences of smoking.

The same is seen in the moronic argument that "green" production of electricity will be economically beneficial because it will create new jobs. Of course it will create new jobs because no one has been so stupid before to pay people to do anything so utterly pointless, but even so the benefit of these new jobs is only one side of the equation. On the other side lies the fact that employing more people to generate the same amount of electricity means it is more expensive and that cost must be passed on through higher prices. Higher prices for electricity means higher costs for businesses and individuals. Those businesses can be tipped into insolvency causing their employees to lose their jobs and individuals who must spend an extra £100 on electricity have £100 less to spend on other things thereby depriving Mr Patel's Merrymart and Madame Fifi's Sauna and Hanky-Panky Parlour of income, resulting in shed staff and less tax being paid. No one should be surprised that studies in both France and Scotland reveal each "green" job to cause the loss of more than two other jobs.

So it is also with the bubble of economic activity arising from an unsustainable expansion of credit. Of course it means people have more money and buy more stuff which means shops and manufacturers employ more staff, make more profit and pay more tax. The government takes credit for the miracle of an ever-expanding economy. Apparent riches for all means votes for incumbents. The other side of the equation in this situation contains what groovy hep cats might term a "double-whammy".

Credit cannot go on expanding for ever, eventually you reach a point where you cannot borrow any more because even the most foolhardy lender is not prepared to advance you another penny. At that point the economic expansion arising from credit necessarily stops and in due course it must be reversed as people realise they must repay their borrowings. It doesn't necessarily happen all of a sudden although it did two years ago because banks simply stopped lending. In addition to the reduction in economic activity resulting from the wind-down of credit-based spending we have the second whammy, namely a reduction in tax receipts for the government. The additional sums received in the boom years were used to strengthen their electoral position. Were we cruel people we could suggest they used tax receipts to bribe voters, but we aren't cruel so we will instead describe the spending of this windfall of unsustainable taxes as the result of nothing more sinister than stupidity. Unfortunately the stupidity knew few bounds so the PIIGS, the UK and many other countries find themselves with government spending commitments far in excess of tax receipts.

A sober and sensible approach to the problem would recognise that governments handed out treats that could not really be afforded even when times appeared good, so now that they are far from good those treats cannot be given any more. The governments of Spain and Greece are trying to cut back a fraction of the unaffordable treats and it is this that causes discontent on the streets. The people are complaining that something they should never have had in the first place (because it could not be afforded) should be maintained despite government income being substantially lower than it was in 2009, it is utter madness. A particular difficulty arises with government spending compared to individual spending, namely that the consequences of reducing it are highly visible. A million people each spending £50 less is equivalent to government spending £50million less - the former is just a normal incident of life whereas the latter is a headline in every newspaper.

I cannot help thinking that pushing one-sided equations at their people and arguing tooth and nail that the equations in question have only one side is the root of current public disquiet in Spain and Greece. There is every sign that the people demonstrating against plans to trim government spending really believe there is only one side to the equation. In a way this should not be surprising, both countries had long periods of socialist government in which the allure of the magic money tree was all pervading - no need to worry, the government will pay for it, the government has a bottomless pit of money because it just plucks some more from the magic money tree. We should be more worried about this reason for mass demonstration than we would have to be were demonstrators complaining about overspending in the past.

The pain of not saving

I am pretty hopeless with money because organising money requires an ability to organise and I couldn't organise a fart in a curry house. In order to ensure I did not spend all my income on fripperies I used to open little savings policies by which I paid a certain amount in each month and could not withdraw anything for five years or more without suffering a substantial loss of interest. They are quite good for a chronically hopeless organiser because all you have to do is fill in a standing order form when you open the policy and the rest looks after itself. Even if the return is not very high, at least you have squirreled something away when you would otherwise have spent it on things you didn't need.

A curious fact about saving is that it can be utterly painless yet provide a tasty bonus when you finally get your hands on the money. Of course inflation is a factor and can mean that the lump sum you get at the end actually has less buying power than the small sums you paid in, nonetheless you still get a lump sum when otherwise you might just have bought another twenty exercise machines to add to the ten you did buy but never used.

Were you to save just £50 a month over five years and made no nominal profit at all you would receive a lump sum of £3,000. That's quite handy when you know you can't trust yourself to stick five £10 pound notes in a biscuit tin under the bed each month and leave them untouched for five years. Saving is not all about making a profit, it is also about preserving something which would otherwise be unavailable because of your disorganised character and spendthrift nature.

What applies to individuals also applies to businesses. If you own your own home you will have repair bills from time to time which could not always be met easily out of current income. Little things are not really a problem for most people, but a new roof or new windows can be, just as the need to buy a replacement washing machine or bed can put a strain on a tight budget. It's so much less painful to pay for replacements from a lump sum of savings, even if the real value of those savings has fallen 10%, than it is to stick the cost on a credit card and pay 20% or more. Businesses face the same problems. Things wear out and must be replaced, shops need to be refitted from time to time, new machinery is required to keep the business viable in a competitive world. These things all cost money and the sensible businessman makes provision for these future risks by maintaining a fund of reserves specifically to meet such costs.

It is rather different for government. There is no need for it to be different but it is because there seem to be votes in spending but not in saving. Of course government makes provision for replacing and repairing infrastructure such as roads and buildings but it does so mainly out of its annual income rather than by setting aside funds to form a pot that can be raided when the money needs to be spent. In one way this is both sensible and inevitable. Every year there are roads that require resurfacing and buildings that need replacement or refitting, so there is never a gap in which they can say "we don't need to spend it this year so we'll stick it in a biscuit tin under the bed". That is only part of the story, however, because this sort of expenditure is akin to you or me having to buy a replacement kettle or computer.

The other part of the story is that some aspects of government expenditure are, by their very nature, affordable only if funds are set aside for future use. Pensions are the most obvious example of this. It seems obvious to me that there is only one sustainable way to provide pensions for the retired. You build up a pot of money or assets during the person's working life and on retirement the pension payable must be limited to that which the pot can provide. Guaranteeing a certain level of pension payment without the pot being large enough to pay it means either taking additional money from those in work in order to subsidise those whose working life has ended or failing to honour the guarantee. That is a recipe for disaster.

There have been numerous examples of private pension funds not being big enough to pay the returns they had promised, with the result that either people who expected a certain income have received less or some have had their entitlement fixed and others have missed out entirely. The option of simply throwing more money into the pot does not exist for a private fund because it does not have the ability to force mugs to pay-in for no return. The government has millions of mugs at its disposal. It can simply divert taxes from one potential field of expenditure and put it into paying the statutory pension and guaranteed pensions to retired state employees or it can seek to raise more and more in tax to cover the cost. Neither of these courses is sustainable.

Pensions are just like shop refits or a new roof on your house. You know they will have to be paid for at some time in the future and clever people with large calculators will claim to be able to tell you how much they will cost and how much should be put aside each year to cover that likely cost. Sensible shopkeepers do not bury their heads in the sand and hope the day never arrives, nor do they expect to be able to find £40,000 lying around in the petty cash tin; they save for it, they build a pot. Sensible house owners likewise have savings because they know that one day the roof or windows will need replacement and that it will be more easily afforded from savings than from current income.

Some quite terrifying figures are in circulation about the likely future cost of pensions for government employees and equally scary figures for the cost of funding the statutory old-age pension. There is one reason and one reason only why there is no pot to pay for the statutory pension and only limited pots to pay for employees' pensions. Government took the money, by way of National Insurance contributions and deductions from their employees' earnings, and spent it on other things because they thought there would be votes in it. They didn't look to the future beyond the next opinion poll and the next election. Both parties are guilty because they have both done it.

Will either have the guts to tell the truth and say that it is necessary to put aside a substantial chunk of tax income each year to provide a pot to pay future pensions? It will be very expensive and might take a decade or more, but it needs to be done.

Speaking of incompetence ...

It was painful watching the Speaker floundering yesterday as his failure to grasp the nettle and show leadership resulted in the very public loss of personal authority over and, indeed, actual control of proceedings in the House of Commons. In just a few minutes last week he made yesterday's humiliation inevitable as he tried to shout down his critics rather than looking them in the face and answering their comments.

For the benefit of my reader overseas I should explain. As you have probably heard our MPs have been caught twisting the rules to award themselves additional income by getting the taxpayer to cover some of their ordinary living expenses. It's caused a huge stink and the Speaker, a rather thick man by the name of Michael Martin, is the person with responsibility for sorting it out. His first move was not to arrange for these claims to be reviewed and paid back but to call in the police to investigate how details were leaked. Last week one MP sought to question his decision to involve the police. The Speaker had two legitimate courses of action open to him, he could have stood by his decision and explained it or he could have admitted that he was wrong and announced that he would be inviting the police to cease their enquiries. Instead he interrupted his challenger, prevented her finishing her question and used extraordinary language to tell her, in effect, to shut up and mind her own business. Another member tried to raise the same issue and was also rebuffed rudely and disrespectfully. Unfortunately Mr Martin picked on two moderate and polite MPs thereby showing himself not just to be intemperate and rude but to be a bully as well.

Many have questioned his suitability as Speaker ever since he was appointed, in the space of just a couple of minutes everything became clear even to his supporters. Here is a man out of his personal and intellectual depth. Parliamentary chickens began to come home to roost. Yesterday he decided to make an address about the whole scandal of MPs' rampant profiteering and offered a limp apology by way of reading a short written statement over which he stumbled on a number of occasions. There was no plan to deal with the problem merely the announcement of a meeting with leaders of the various political parties. It simply didn't get anywhere near addressing the problem, it showed no leadership or initiative and gave no hope that he was capable of resolving a problem that had become a national scandal.

Following his address he was asked what was happening about a motion of no confidence in him which had recently been tabled but not yet scheduled for debate. And that is when his last shred of authority disappeared as he was unable to explain the applicable procedure. It was apparent that he had totally lost control of proceedings as members barracked him in a way not seen in living memory. Today he opened the day's proceedings with a personal statement lasting barely half a minute in which he announced that he will resign as Speaker on the 21st of June.

These events were a fine example of what personal authority entails. One might expect a Speaker of the House of Commons to be an expert in Parliamentary procedure, to have a quick mind that allows him or her to respond to points of order without disrupting debate unduly, to possess a ready wit with which to diffuse tension, to have an air of authority and to be able to represent our Parliament overseas and to visitors from overseas through intellect and charm. Mr Martin has none of these qualities. Most obviously lacking is the air of authority without which it is impossible to be an effective chair of a debate.

Personal authority is such a difficult thing to define yet nothing can be easier to recognise in real life. It is that aura that makes us automatically listen to someone and to be prepared to accept what he says, we see it in captains of sports teams and at our places of work, some people are natural leaders and others are not. Tony Blair is whereas Gordon Brown is not, indeed he is the only Prime Minister in my lifetime to lack that capacity. I think the quality is one of self-assurance as much as anything else, but it is not only self-assurance. It carries with it an invitation to follow the leader rather than a challenge to do so. It is "this is what I think and I hope you will agree" rather than "this is what I think and you must accept it". The first causes any debate to start from a presumption that the leader is correct whereas the second encourages discord and conflict.

The central lesson to be learned from Mr Martin's disastrous reign as Speaker is that picking the wrong person cannot easily be rectified. He became Speaker in October 2000 yet it took until May 2009 for the cumulative detriment of his incompetence to be so overwhelming that he had to go. In the meantime the government has steamrollered badly drafted and ill-considered legislation through Parliament with little, if any, debate and detailed policy initiatives are now launched through leaks to newspapers and speeches to special interest groups. A competent Speaker would not have allowed this to develop as it has. The recent furore over MPs' expenses was the last in a long line of issues on which Mr Martin's lack of leadership led to conventions of honourable behaviour being weakened and then abrogated entirely because there was no one to uphold them. It's all very well saying MPs and ministers should behave honourably but not all will, some try to push the boundary. That is where qualities of leadership are required in a Speaker so that he can ensure proper standards are maintained. It helps to set the whole atmosphere by which the business of the legislature is conducted and acts as a check on any governmental desire to rule by diktat rather than by reason.

So now we have reached a point at which both Parliament and the government are drifting from one crisis to another, neither is being led or managed with any degree of competence. It will take a lot more than a new Speaker to put things right, but it does need a new Speaker, one who can pick the whole thing up by the scruff of the neck and give it a good shake. That won't make the government any more competent, nothing can do that because they simply don't have able people waiting to replace the dross currently filling the cabinet. What it can achieve, however, is the reintroduction of a proper system of law making so that any further damage done in the final year of this rotten Parliament is kept to a minimum.

Trust local judgment

One of the most useful pieces of advice I was given at the start of my career was never to assume I knew more than my opponent. It was not an easy piece of advice for an arrogant young Turk to take. I always prepared thoroughly (at least for the first few years) and believed I went to court armed with an excellent knowledge of the evidence and as good a knowledge of the law as was required. How, I asked myself, could I not know more than my opponent because he couldn't possibly be as thorough or as clever as me. Of course it didn't take long for me to realise the value of the advice. That value lay in recognising that "knowledge" is not all about reading bits of paper and absorbing information, it is also concerned with understanding the possible ramifications of what you have learned and the various ways it could all be interpreted.

From time to time barristers take over cases previously in the hands of another member of the Bar, perhaps he is double-booked or the client didn't like him or whatever, cases sometimes have to be passed to others; it is known as "returning" - the original barrister must return the papers and someone else picks up the "return". I don't think I received a single return in which I agreed with every aspect of the advice given by my predecessor or every aspect of the way he had prepared documents for court. That didn't mean I was right and he was wrong or vice versa, it merely meant that he was doing the case his way and I did it my way. Not everyone gives the same advice because not everyone interprets the law in the same way; not everyone drafts documents the same way because not everyone agrees on the most effective way to present the case to the client's best interest. There is nothing special to the law in this, ask a dozen gardeners when, into what type of soil and how deep they plant seed potatoes and you can expect at least ten different answers. It's not a matter of one being right and the others being idiots, they all form different views based on their own experience and their own judgment.

Of course there were times when I would pick up a return and find a fatal flaw in the case or a killer point not yet taken. It didn't happen often, only twice that I can recall, but it is bound to happen sometimes. For all I know people taking returns from me found the same even more often. Usually the reason I would want to alter something about how the case was presented was because my particular experience (or lack thereof) persuaded me that a change of tack would be in the client's interest. Not uncommonly I would make a change after learning the identity of the judge who was to hear the case. There were some judges before whom a particular approach was a suicide note, so that had to be abandoned and something else found otherwise disaster would be likely to strike. Local knowledge was important.

You see, wisdom and judgment are not absolute qualities. The most reliable judgment generally comes from a combination of technical knowledge, experience and strong powers of analysis, but nobody knows everything, nobody has perfect judgment and nobody is on top form all the time. Nonetheless, if you want the highest chance of a job being done well you entrust decisions to people with these three qualities. And where there is a local element to the issue you would be well advised to look for local knowledge too.

A couple of weeks ago I burbled on about the inability of central government to provide services efficiently because of excess bureaucracy and political interference. It seems to me that a vital aspect of providing services, whether in the private or the public sector, is effective local management. Only local management by properly experienced people can combine the qualities needed for good decision-making and an efficient use of resources at the point of use. That does not mean that the same decisions will be made in the same circumstances everywhere in the country. Indeed, it must not mean that. Uniformity of decision-making means that decisions are not being made, it means boxes are being ticked for administrative convenience.

A particular problem caused by services being provided by government, rather than just funded by government, is the pressure for uniformity. Heart-rending stories appear from time to time about someone with a particular serious medical condition who cannot get the treatment he needs in his area or cannot get it as quickly as it could be provided if he lived elsewhere. Calls go up for new central guidelines to guarantee uniformity of treatment for all sufferers of that ailment. Ministers condemn inequality, promise a review then issue ever more detailed guidance. In a few months' time another example arises, then another a little while after that. The problem, I believe, arises because of too much central guidance not too little.

Good local management makes exceptions where it can for individual exceptional cases. This happens in individual branches of nationwide supermarkets, car hire companies, carpet shops and the rest. It happens because in the real world, where the delivery of good service is crucial to survival in a competitive marketplace, sensible local management is seen to be an asset not a cost. Not every hardluck story has a happy ending in the private sector, but the system allows greater flexibility than where day-to-day decisions are dictated from the centre rather than being entrusted to the front line. Too often the explanation for expensive treatment being denied in one area when it is available in another is that targets could not be met if money were diverted from, say, ingrown toenails to face cancer. Rather than make an exception and risk penalties for failing to meet targets, local managers pass the buck upwards.

Swathes of guidelines from the centre carry two risks. First, they rely on the judgment of too few people. An inner circle of advisors, some medical (whether or not hand-picked to be poodles for the government) and some political, give their views and a minister decides. The combined power of judgment is a tiny fraction of that available at local level, yet what they say holds sway over the whole country. This risks stifling the very skills that good local managers should be employed to utilise. Secondly, the edicts they issue can have no effect on the ground unless they are too specific to be generally useful. Waffle has no effect so they descend into micro-management without having detailed knowledge of local conditions. The reason micro-management from the centre cannot work is that it approaches problems from entirely the wrong perspective. All the best central guidelines in any field set out prohibitions not prescriptions, they define what should not be done rather than trying to second-guess every possible scenario and defining what should be done. Take professional conduct rules as an example, they are all about types of conduct which are not acceptable, provided they are complied with professional people are trusted to use their own judgment.

Whether it be in the NHS, state schools, refuse collection or any other service provided by central or local government, no one has a monopoly of the best way of doing things. Ministers in central government are, I would suggest, worst placed of anyone in the chain to say what must happen on the front line. Failure to realise that variations in practice are a strength not a weakness and that variations in practice lead to improvements through experimentation, leads to stagnation at ground level for fear of stepping out of line with the one true path. A strong government understands how little it knows and trusts people to do a better job than the minister ever could, a weak government seeks to establish strength by pretending to know things it doesn't.

Think always of the little people

There seems to be an obsession these days with what "government" and "business" can do. When problems arise there are countless interviews with politicians and economists suggesting that this or that policy should be laid down from above - government should do this, business should do that.
What about us? What about the little people who end up paying for it all?

I suggest an alternative basis for national economic planning. I suggest that we plan things from the bottom up not the top down. It's just a thought for your delectation. Let me explain why I find the idea attractive.

Everything, and I really do mean everything, is paid for by the man on the street. He isn't necessarily on a UK street, when we export goods we do so because somewhere in a land far away there is a person at the end of the chain. We export a pair of fine leather gloves, they end up on the hands of a fellow in Switzerland. We export a chain-making machine, the buyer makes chains and sells the chains. The machine is initially paid for by the chain maker but he can only do so from the proceeds of sales, it is the end purchasers who really pay for it a few cents at a time with every purchase of the finished product. Farmers sell most of their produce to wholesalers or supermarkets, but they are only prepared to pay what they pay in anticipation of then selling the produce on at a profit to us little people. And so the story goes for all businesses. Even in the world of high finance the massive sums gambled by pension and insurance funds have an end user, a human end user, who either gains or loses from their activities.

It is easy to lose sight of this when talking about the activities of big companies and governments. They deal with mind-boggling sums of money as though it were loose change. Want some windmills instead of effective and affordable power stations? Have £100billion. Want a congestion charge scheme in Manchester? Have £1.5billion. Want to sell those bundles of loans? Have £50million. None of it seems to matter as much as it should, it's just figures on a page to those playing the game.

Losing sight of of the little people leads to bad decisions and expensive waste because the strongest check on judgment is removed. The strongest check on judgment is conscience. Conscience forces us to weigh in the balance the adverse effects our decisions might have on others as well as the potential gains. Some adverse consequences are so serious that our consciences do not allow us to take a risky course of action for fear that those adverse consequences will follow. It is why most of us resist the temptation to drive at sixty miles per hour along an urban street even when we know there is no speed camera and very little chance of getting a ticket. It is why most fund managers do not put investment funds on the three-thirty at Doncaster, most archers don't practice in a busy shopping centre and most chefs don't urinate in the soup. For those whose conscience needs a nudge, many acts that do harm to others are also criminal offences or can lead to civil claims for compensation.

Lose sight of your possible victims and it becomes easy to look only at potential gains. The whole game then changes from reaching a balanced judgment to looking at only one side of the equation. This can have two effects. First, and most obviously, too many risks are taken causing inevitable losses when they do not pay off. Secondly, the exercise being undertaken is seen as being for the benefit of the undertaker rather than for the benefit of others. We have seen this in the way banks have put their shareholders and investors at risk by trading in instruments they could not value and paying themselves huge bonuses by assuming the value was high and that massive profits were being made. Now that the instruments have been seen to be seriously flawed and, almost certainly, not worth what the banks claimed they were worth the effect on the little people is simply enormous. Not only do their pension funds look like a rose bush hit by a swarm of leafcutter wasps but the problem is exacerbated by the increase bonuses have made to administration costs.

English law does not have a specific provision aimed at seeking recompense for the innocent victims of such shockingly bad business judgments. It is different in the USA where there are mechanisms aimed at precisely this situation. Financial mismanagement is a serious target for American law because America approaches much of its lawmaking from the bottom-up not the top-down. Its laws are made and applied for the benefit of the little people. Of course it also has top-down laws but these are severely constrained by the terms of the Constitution which makes clear that government exists only because the people permit it. The default position is that harm done by one person to another should result in compensation and, where appropriate, criminal penalties. This has its downside, as we see in particular in the willingness of juries to award vast sums for minor physical injuries but these are almost always reduced to more sensible levels on appeal or by agreement once an appeal is either launched or threatened. What, to my mind, is admirable about America's approach to the criminal and civil law is that it sees financial victims of careless trading in the same light as physical victims of careless driving. It can only do so by recognising that the law exists to protect the weak from the misdeeds of the powerful.

All over America directors and senior managers of failed investment firms are facing prosecution and civil lawsuits for taking undue risks. Of course it can be said that America's laws are not effective because they did not stop bad deals although the reality is that no one can say how many more bad deals would have been done had those laws not been in place. What is clear is that those who took bad decision have to carry the can. Here all they carry is their latest bonus.

We also see the effect of ignoring the little people in the activities of government. Decisions are often taken according to whether they will benefit the government rather than whether they will benefit the citizens. There are innumerable examples of this from the last eleven years. A small recent example has been the holding of cabinet meetings in cities outside London. There is absolutely no possible benefit to the little people from this gimmick. It has been done solely because a government that wants to hold onto power for the sake of holding onto power thinks there might be some votes in holding cabinet meetings in cities containing many marginal constituencies. Each away-day costs taxpayers about £200,000 - a sufficient sum to run a small primary school for a year, a sum roughly equivalent to the income tax paid in one year by fifty average earners, a sum roughly equivalent to eight years' gross wages of an average earner, a sum higher than the average house price in the UK over the last year, a sum sufficient to feed a family of six for twenty years.

Only by keeping the little man in mind at all times can the cost of government decisions be seen in context. But it seems to me far more important to keep the little people in mind so that government constantly remembers it is there to serve us not itself. It is there with our permission, we are not here with its. And therein lies the greatest danger of socialism. It is not just that it requires adherence to a flawed ideology, although that is bad enough, it is that the State and the government are given an existence separate from the people. The socialist State's primary aim is to preserve itself. The socialist government's primary aim is to preserve itself. This leads to a way of thinking evidenced every day by poor Gordon and his cabinet of lightweight autocrats.

Are the people doing what the State wants them to do? If not they must be forced to do so because dissent weakens the State and that cannot be allowed. The longer a single socialist government remains in office the more autocratic its rule becomes. This is inevitable because it is idealogically incapable of admitting to error and reversing bad policy. To do so would be to admit error by the State, a concept unknown to socialist dogma. Thus new policy concentrates on reinforcing old policy rather than improving the lot of the little people. It is a top-down process in which the established policies of the State must be imposed regardless of the consequences.

There is nothing surprising about any business activity turning bad when it is operated for the benefit of its owners or managers rather than its customers. Concentrate on yourselves rather than the little people who eventually pay for your mistakes and you cannot reach a balanced judgment. Bad decisions will be made. Expensive, bad decisions. As in business, so in government. Leglislating against the people rather than for the people is exactly the same as an investment fund operating to maximise it directors' bonuses rather than its customer's returns. It acts against the central purpose of its existence with the inevitable consequence that the little people will lose.

A disappointing meal

I visited a local restaurant last week when my usual enthusiasm for cooking had gone AWOL. It first opened about four or five years ago and has changed hands at least three times since then. It has been a winebar, an Italian restaurant, a French restaurant but nothing has worked. The current owners bought the place about eighteen months ago and have struggled for about a year. It seems to be one of those unfortunate businesses that is incapable of making money. I have been trying to work out why.

The building itself is new, stylish and in a good location, right on the corner of a park with lots of passing traffic both vehicular and on foot. In the summer there are shows in the small open air theatre in the park which gets very busy at weekends. One drawback is that parking is restricted, although that shouldn't be much of a handicap in a heavily populated area. The restaurant itself is roughly circular and seats about forty people at tables with a bar area capable of seating a further eight or ten. Many smaller establishments around here have done a roaring trade for years, so size can't be the problem.

When FatBigot Towers was undergoing serious refurbishment last year I was left without a kitchen for a while and visited a number of local eateries. It was a fascinating experience to see how they operate and, in particular, to spot differences between the most and least successful. Those which are always packed to the gills have two things in common, reliable food and excellent service. There are some at which the food is nothing special but every customer is looked after efficiently without having their evening interrupted unnecessarily. By contrast, some serve excellent food yet are rarely full because the service lets them down. For me nothing spoils a meal out more than having to wait too long for food or drinks, having to make a huge effort to get a waiter's attention or being badgered every ten minutes by that most annoying question: "how is everything?"

There was a time when last week's restaurant of choice was reasonably busy. The new owners retained a waiter who was already employed there and his professionalism in his work kept the customers happy. Although employed as a waiter he was in reality the manager and kept the whole "front of house" operation moving very well. I learned later that the previous owners had made a loss for most of their time there but saw taking go up markedly when that man was engaged, so they ran profitably for six months then sold at the peak of the market. The new owners, a married couple, decided they could save on costs by running it themselves and the waiter moved on at the end of last year. Taking fell almost immediately so the chef was next on the chopping block and the wife took over in the kitchen, thereby requiring a waiter to be employed. No doubt they thought it would be better to save the relatively high cost of a chef and substitute with a boy, then a girl, then a different girl, then a boy, then another girl, all on the minimum wage.

I hadn't eaten there for several months and was saddened by what I encountered. The waitress took my order but forgot to bring my drink. The sirloin steak I ordered was not sirloin steak but a cheap cut (the type sold in supermarkets as "frying steak" usually meaning a thin cut of topside or silverside) which had been bashed to the edge of next Friday with a wooden tenderiser. Prompting from me finally resulted in a beverage appearing but my plate was not cleared away until at least ten minutes after I had finished. It was a very shabby performance all round and all of it caused by self-defeating attempts to cut cost. At 8.30pm, which should be peak time for a restaurant during the working week, only six customers were present. Poor food and poor service are combining to kill the dream the owners had on taking over such a short time ago.

Perhaps the place is just blighted, after all a quick succession of owners points to it making regular losses. More likely, it seems to me, it simply hasn't been run properly. The final sign that it is approaching death came in the form of a poster in the window which caught my eye on the way out. It advertised that the establishment has been nominated for an award. I had never heard of the particular award before, and am not prepared to give it credence by naming it here, so I looked it up. Anyone can nominate a business for the award but nomination costs money, rather more money than the cost of the trophy and certificate awarded to each winner. The organisation making the awards also sells business services and a cynic might think that those who buy most receive the highest level of award. It is just an advertising scam and a last desperate attempt by a failing restaurant to attract customers by telling a blatant lie - nothing about it could win a genuine award.

As a, now, former customer I could tell the owners what they have to do. They should increase the quality of ingredients not reduce them and employ an experienced and professional manager to ensure service is of a high standard. In the summer they should operate part of the restaurant as a snack bar selling sandwiches and take away drinks to users of the park. Easy for me to say, of course, because I won't have to fork out the extra costs and risk not recouping them through additional trade, but it is either that or continue in their present way losing cash until they have none left to lose. A recession is not the time to be uncompetitive.