Vita Not So Bella: The View From Lazio

The foreign tourists are still visiting Largo di Bolsena and you can still hear the voices on the south Tuscan beaches of affluent Brits, Americans and north Europeans but the visitor numbers are down significantly – and the voices sound a little less sure than when the credit spigots were flowing.

This year in Lazio the consequences of the crisis are more obvious with local businesses complaining their takings are down. Lazio has never been the tourist hotspot of Tuscany or Umbria, but in the late 1990s, and until the financial crisis hit a couple of years ago, the region enjoyed a steady increase in foreign visitors.

And why not the – the countryside is every bit as lovely as Umbria to the north and the Lazio villages are gems. The region enjoys a fine coast and one of Italy’s most unspoilt large lakes with fresh clear water and excellent fish. Slowly but surely property prices had risen, driven by foreigners unable to afford Tuscan prices and Romans seeking tranquility outside the city.

Although property prices have not declined in the last two years they have flattened now and locals appear to be getting more realistic when it comes to foreigners and what they will pay.

If one were to guess which north European countries are not doing badly in the crisis, spotting country number plates in Lazio wouldn’t be a bad way of making an assessment. Throughout the summer there have been few British, French or Belgian cars touring the lanes and roads of Lazio. Dutch and German have been far and away the most obvious. And for the first time in a decade of visiting or living in the region, I noticed some Czech and Polish cars.

But away from the tourists, life for my neighbors and other ordinary Italians has got seriously harder. A psychologist in the nearby town of Bagnoregio told me that many of her clients say they have cut down on the basics and now have only one major family meal a day. Supporting evidence of this would include the local restaurant owners complaining of much lighter traffic and of several local greengrocers telling me that their takings this year are down by about 40 percent.

With the political crisis intensifying – most Italians expect an early parliamentary election this autumn and the departure of Silvio Berlusconi – there is fear about the future in the air.

One thing that Italy does have going for it – and one not noticed by many of the financial commentators in the UK and the United States — is that while the country has been as free and easy as its south Mediterranean neighbors with government spending, Italy owes a large proportion of its debt to itself and not to foreigners – Italian savers have been propping up Italian government expenditure by buying government bonds.  A downgrading by the credit agencies of Italy would have less effect than a downgrading on several other Europeans countries.

Italian economic performance is as ever hard to assess: about 30 percent, and maybe more, of the Italian economy is black, a testimony to traditional widespread tax evasion.

Even so, signs of private and public belt-tightening are clearer now. My local village of Celleno will shortly see the closing of the local school, a consequence of the decision to consolidate schools in the region.

Blood Diamonds: You Can’t Make This Stuff Up

The Daily Telegraph reports today on how South African authorities are considering the possibility of filing charges against Naomi Campbell and others for handling the gift the model received of uncut diamonds from alleged war criminal Charles Taylor. This follows her testimony and actress Mia Farrow’s at the former Liberian leader’s war crimes trial in The Hague.

The newspaper reports also that: “The model, who was born in Streatham, South East London, was pictured relaxing on holiday in Sardinia with boyfriend, Russian billionaire Vladimir Doronin, and actor Leonardo Di Caprio.

Di Caprio was the star of the film Blood Diamond, which rose awareness about the issue of diamonds being used to fund the conflict in Sierra Leone.”

Islam Wasn’t Responsible for 9/11 — Al Qaeda Was

Sadly some American politicians and talk show hosts have decided that the proposal to build a mosque two blocks from Ground Zero should be opposed — their arguments lean heavily on conflating Islam and Al Qaeda. My take on the Cordoba House debate was carried by the Daily Caller today.

Tax Them Until They Squeal…Or Move Abroad

If you took the U.K. Business Secretary Vince Cable at face value in his interview carried in yesterday’s Sunday Telegraph, you would think that he is unaware that Britain already has a graduated or “progressive” tax system where the wealthier pay a larger percentage of their earnings to the government than those less well off.

Take this remark from Cable yesterday in an interview full of his mantra about “fair taxes”: “What we are trying to inject into the argument is that if you become a very highly paid investment banker you finish up paying more than if you’ve gone off and become a voluntary worker or become a physicist in the National Physical Laboratory, or whatever. I want to make it progressive in that sense.”

The “it” in question is Cable’s graduate tax proposal that now seems worryingly to have secured some support from the Coalition’s David Willetts, the Universities Minister, who is now saying that more university finance should be met by graduates “after they are in well-paid jobs”.

Recommendations for how to cope with Britain’s universities funding crisis will soon be forthcoming from a review headed by Lord Browne. Despite disapproval from many Conservative MPs, the independent review into university finance was asked by the government to include Cable’ graduate tax idea in the mix of solutions to be considered. The review reports in the autumn.

What is strange when reading or listening to Cable explaining his graduate tax is that he seems less interested in finding a solution to Britain’s university funding crisis and more interested in using the opportunity it presents to increase taxes. The graduate tax is motivated by his wealth redistribution obsession – taxes, as far as he is concerned, are just not high enough.

In the interview, he avoids saying that directly but then how are we meant to interpret his position differently? When asked what he would consider success after five years as Business Secretary he responds: “a tax system that means people at the bottom end of the scale pay less and at the top end of the scale pay more.” Again, Britain already has such a system and will continue to have one with or without the graduate tax. The only conclusion is that Cable wants even higher taxes on the middle-class and the wealthy. So how high should they go?

The top rate of U.K. income tax stands at 50 percent. Impose a graduate tax of, say, 5 percent and will that be enough to satisfy the Coalition’s Business Secretary? Will that be enough redistribution? And how many Britons will emigrate as taxes rise?

What adds to the shock of the Sunday Telegraph interview is how uninterested Cable is with his ministerial portfolio as Business Secretary. Success in the post for him is to increase taxes – not to improve Britain’s corporate competitiveness, not research and development, not commercial or product innovation, not productivity and not even – at least in this interview – corporate governance. There is no discussion of industrial policy and what the right balance is between government intervention and the free market or whether government should avoid trying to pick winners and losers or instead focus on creating the right environment and circumstances for enterprise and the free market to flourish.

No, as far as this Business Secretary is concerned success will be determined by having imposed even higher taxes. One can only assume that Prime Minister David Cameron is prepared to let Cable talk as though he’s the Chancellor the Exchequer and Universities Minister and Business Secretary all rolled into one because to do otherwise will prompt a breach and a row in the Coalition government.

On some many levels, the graduate tax is a bad idea – as are higher taxes in general. On the fairness scale the tax doesn’t pass the smell test, as a study released today by the University and College Union shows. Yes, a graduate who went on to be a highly-paid investment banker would pay a ton of cash over his working lifetime for his degree but so would those lower down the income scale. A nurse, for example, could end up paying three or four times the actual cost of tuition fees and a doctor seven times. How is that equitable? The burden on the nurse, for example, is going to be heavy and much harder to cope with than the burden faced by the investment banker.

The graduate tax would have the inevitable consequence of encouraging a brain drain on the scale of what hit Britain in the 1970s and young Britons would have greater options and ease now of moving overseas and securing jobs because of their work rights in the European Union and because Asia and the developing World is competitively keen to secure talent and skills.

And those British graduates who did so and remained abroad would in effect get their higher education for free – they would never pay the graduate tax.

Second, the universities sector is now global and big business. As the Economist pointed out this week, the number of students enrolled outside their home country has trebled since 1980. America is the World leader in this global higher education market with Britain in second place. But that could change and the U.K. could lose its place easily because of increased and aggressive competition. There are now many continental universities that teach wholly or partly in English, American universities – and British ones – are opening more campuses overseas, in Europe, the Gulf and Asia.

The government not only has to ensure that British universities remain excellent and well funded in order to attract foreign students (who represent a revenue stream) but it will need in future to do everything it can encourage Britons to stay and study in the U.K. because increasingly they will have easier opportunities and maybe cheaper ones, if the proposed graduate tax is taken into account, to study for their first degrees, let alone their graduate ones, abroad.

That will certainly be the case for British students from wealthy or affluent families but the market is changing so fast that there will be a global education loans market developing quickly and available for students to tap into and free themselves from the constraints and restrictions imposed by individual countries and governments.

This is something that doesn’t seem to have occurred to Cable and others in the Coalition government. The brain drain could start involving Britons who have not even graduated yet. Britain is only an island when it comes to geography.

In the brave New One World we live in, education and the retaining of the best and brightest is going to determine the winners and losers when it comes to national economies. Instead of obsessing about wealth redistribution, the Coalition’s Business Secretary should be thinking along these lines and worrying about how to keep Britain competitive.

Churchill: America Made The Big Decisions

David Cameron is still paying the price for his remarks about Britain being the “junior partner” to the U.S. in the “special relationship.” During a town hall meeting in Hove yesterday he was accused by a pensioner of “denigrating” his country. Cameron responded immediately by conceding that he misspoke when he used the date of  “1940” during his “junior partner” interview with Sky News on his trip to the States. But that didn’t assuage the pensioner. His previous corrections as to the date have also fallen on deaf ears. The critics actually care little, I suspect, whether Cameron was talking about 1940 or the 1940s and beyond.

Admittedly, his “junior partner” comment was bold – and some would say foolhardy. But his remark about Britain being the junior partner in the alliance with the U.S. during the Second World War and since are accurate.

Of course, 1940 was the triumphant year for Britain. Without British defiance in 1940, the game for Western Europe would have been up. The stubbornness of Winston Churchill and the Battle of Britain pilots mitigated the Nazi achievement. But the then British Prime Minister was in no doubt in December 1941 what the Japanese attack on Pearl Harbor meant. “So we had won after all!” was Churchill’s immediate response.

Read the opening chapters of Max Hastings excellent book Armageddon: The Battle for Germany, if you want to understand how the Americans (and Russians) increasingly called the strategic shots. In the immediate months following Pearl Harbor,  “the Americans deferred to his (Churchill’s) greatness and to his nation’s experience of war,” wrote Hastings, a highly respected WWII military historian and hardly an unpatriotic journalist.

He continued: “From 1943 onwards, however, Churchill’s influence upon the Grand Alliance dwindled almost to vanishing point. The Soviet Union displayed the icy arrogance it considered appropriate, as paymaster of the vast blood sacrifice necessary to bring Hitler’s empire to bay. The United States made plain its intention to determine strategy in the west and invade Normandy in summer 1944 – Operation Overlord – as its forces waxed in might while those of Britain waned.”

And Hastings quotes the significant players themselves. Churchill’s private secretary wrote that the British war leader is “by force of circumstances little more than a spectator.” “It was America who made the big decisions,” Churchill acknowledged. And that isn’t surprising considering the huge materiel production of the U.S. and the massive numbers of troops it deployed.

On some of those “big decisions” the Americans got it wrong – Roosevelt was wrong to concede so much to Stalin when it come to the division of Europe, although what in reality he could have done to stop the Iron Curtain descending is another matter. But British strategic vision about the conduct of the war against Germany was deeply flawed, too. Churchill’s obsessive notion of rolling up the Germans from the south, his Mediterranean Strategy, was nonsense and he remained wedded to the idea of penetrating Germany through Italy and Yugoslavia as late as the winter of 1943-1944.

As Hastings writes: “Yet the American vision about the most important strategic decision of the western war, the assault on the continent, had proved superior to that of the British.”

On a personal note, my father, Charles Dettmer, a British Commando, fell victim to the Mediterranean Strategy. He was badly wounded and lost his arm on the heights above Salerno in 1943. Not that he blamed Churchill for that! He remained for years later, critical, however, of the “soft underbelly strategy” and mystified why Churchill thought it a good idea of slogging up the length of Italy to get to Germany. And sitting where I am now writing this blog posting on my terrace in Italy overlooking the high hills and mountain ranges of Lazio and Umbria, I can see why.

Historical accuracy aside, why did Cameron feel it necessary to make his “junior partner” remark? Most professional and lay commentators maintain that he wanted to appease President Obama.

One Daily Mail reader writing online to the newspaper commented: “Sadly DC showed his inexperience in dealing with ruthless politicians like Obama who will do virtually anything to look good in the eyes of the US electorate. If that means bullying our Prime Minister or BP, that is what he does. Cameron’s mistake was to act in a fawning, obsequious manner towards the charismatic Obama. However he has now discovered that his own electorate has a tad more backbone than he displayed.”

But as Cameron emphasized in the town-hall meeting at Hove yesterday, he didn’t make his “junior partner” remarks to the U.S. President. He first came out with it to Britain’s Sky News – not something carried on U.S. television. Obviously, he knew the comment would be picked up elsewhere and in the U.S. But his selection of who to say it to first – a British outlet – would suggest that the primary audience he had in mind was a British one. Again why?

I think what Cameron is trying to do is to prompt the British to understand that time and circumstances have indeed changed and that Britain’s place in the World has moved on and so should our thoughts about ourselves and therefore what our strategic and foreign policy thinking should be. Hence British Foreign Secretary William Hague’s talk of improving and strengthening our relations with the BRIC countries and of our place in Europe and hence the Prime Minister’s trip to India. This may be unappealing to British traditionalists and those who will not let go an imperial past and pomp and glory and wallow in WWII films, but it is realistic.

Coalition Attacks Pensioners and Savers

Steve Webb, Britain’s Pensions Minister, has told the Daily Telegraph that the Coalition is “making changes to reinvigorate a culture of saving”, all part of the government’s plan to raise the retirement age sooner than was expected. Apparently, new figures show that life expectancy in the U.K. is increasing more rapidly than was forecast even just four years ago when Labour drew up its plans to raise, more slowly than the Coalition, the retirement age.

But doesn’t there seem to be a colossal mismatch between what the Coalition has actually been doing on the savings front with all of its talk about reinvigorating a culture of saving?

Following on from Labour – and the same is happening on the other side of the Atlantic – interest rates are being kept so low that inflation is being allowed to eat away at savings.

And the Coalition has clobbered those who are trying to save for their retirements by increasing the Capital Gains Tax on the sale of second homes and shares.

As I noted in an earlier blog posting, about 250,000 British families own a second home and there are one million buy-to-let properties. Many who bought a second home are not wealthy but decided after the Brown government raided private pensions that the best way to help weather their retirements with a little bit of dignity was to invest in property. After all no one can live on the old age pensions the U.K. supplies – that is if they want to avoid penury. So Coalition is punishing the people who are trying to ensure that they are not an increasing charge on the State.

Not content with raising CGT, thousands of British holiday-home owners face losing a range of tax benefits under changes announced in the Budget. From April next year, holiday property landlords will no longer be able to write off “trading” losses from second homes against their tax bill. Capital allowances and capital gains benefits will also go. That will also disrupt the pension plans of tens of thousands of people – many of who based retirement plans on the current tax rules for holiday lets.

So much for reinvigorating a culture of saving! But it gets worse in the Coalition’s obvious undermining of savers. New so-called tax simplification rules being proposed by the Treasury are also going to hit savers and those close to retirement. As economics commentator Ian Cowie has pointed out: “Many members of final salary company or occupational pensions face big annual tax bills and other savers will be prevented from topping up their pensions in the year of their retirement, if the Treasury proceeds with its latest proposals for ‘tax simplification’.”

On top of that the increase in Value Added Tax will leave even less money available to save. When it comes to saving, Coalition deeds are totally at odds with Coalition words.

Part 2 – The Silliness of Simon Heffer

Part 2: The Silliness of Simon Heffer

On 30th July in a Daily Telegraph column ostensibly criticising Chancellor George Osborne for arguing that any Trident replacement should come out of Ministry of Defence funds we got these gems from Simon:

“We live in a world whose massive instability seems to have passed the Prime Minister by.”

“Dave (by this Simon means Prime Minister Cameron) so obsessed is he with image management that real issues of governance are pushed to the margins.”

“If there is the political will, the money can be found to maintain the defence of the realm. As I have argued before, end the overseas aid budget, which is a pointless, socialist waste of money at £7 billion a year.”

As I asked in an earlier blog posting on Simon, are these really the comments one expects from a serious commentator writing for a supposedly serious daily newspaper?

You may or may not agree with Cameron’s recent criticisms of Israel and Pakistan or think they should have been made so publicly (I for one think the Prime Minister was right in the content of what he said and how and where he made his remarks), but does anyone really believe that the Prime Minister is unaware that we live in a dangerous World – always have actually – and that instability from elsewhere threatens?

When commenting on the Coalition, Simon likes to press the idea that the Prime Minister is just a PR man focused on image solely. What he ignores is how radical this government is planning to be – and radical in a lot of Conservative/Libertarian ways. Nothing less than a radical reform of the state and the relationship between the state and the public is being aimed for, a point emphasized last week by the Economist, which noted that “it is shaping up to be an ambitious administration.”

According to Simon, the Prime Minister is not interested in “real issues of governance” but let’s look at the short record so far. The Coalition has introduced an austerity package aimed at ending the country’s fiscal deficit that could see most government departments facing cuts of up to 40 percent – it is a spending reduction package that shames other European governments who claim they too are intent on putting the public books in good order.

But the Coalition is not stopping there. Coalition ministers intend to seize the opportunity to reshape the State and are proposing truly radical changes to NHS management, the Welfare system, schools, and the relationship between the police and the public. The Coalition is already acting to push back on the astonishing civil rights encroachments of the Blair and Brown governments. As the Economist – hardly a lefty or Lib Dem publication – argued “the historic nature of the coalition government itself is now less interesting than its domestic politics.”

So much for the Simon claim that the Prime Minister is pushing to the margins real issues of governance!

Does Simon think that he is writing fine commentary when he sneers and insults and misrepresents and tries to make out that Cameron and his ministers are ignorant and immature. Is this how Heffer’s mentor T.E. Utley wrote? Utley was an ideological Conservative but in his columns he was not bombastic and stuck to the facts and he would never have demeaned a Prime Minister by referring to them in a condescending manner by their first name.

So what does Simon think he is doing? And why he is doing what he is? Well, his chums on the right of the Conservative Party no doubt are egging him on. They, of course, are unable to accept any compromises to their narrow Conservatism. As far as they are concerned Britain should have no mass immigration – European Union citizens included – and Conservatives should not share government power. They want an old Britain that stands alone, proud, free and brave, etc. That fits in well with the kind of Britain Simon would like – the England of Trollope, where the Celtic fringes and working class people knew their places.

And so to be brave and free and proud we need an independent nuclear deterrent and shouldn’t be wasting money on some natives overseas. And according to them the nuclear replacement should not come out of defence funds but the government reserve. Well, boys, I have news for you – there isn’t a government reserve, the coffers are empty!

Britain’s nuclear deterrent isn’t and never will be independent – the Americans would have to agree before we fired it! And which country are we going to shoot at? The Russians? We knock out a couple of their cities and they knock out Britain lock, stock and barrel. Terrorists who sneak in a suitcase bomb? Iran has a far more important target than the U.K. – Israel.

I can well understand why Reagan thought all the generals talking about MAD were mad.

Back to Simon, briefly. The days when Britain’s overseas budget went straight into the pockets of Third World dictators are kind of over, Simon. Aid is far more targeted and monitored – although more monitoring is needed – and aid is starting to get more results-oriented, something Andrew Mitchell, the International Development Secretary, is keen to increase.

Yes, money to India and China should cease now but a lot of good can come from that aid budget in Africa and less developed countries, helping to ease the instability Simon worries about so much and encouraging economic development and that helps to ease the immigration pressures on us. Simon, maybe you should read less Trollope and start reading more studies and books on economic development, aid mechanics and even brush-up on what is actually happening in Africa.

Birthright Citizenship – To Hell with the Constitution!

So now we have a second Republican Senator calling for the “revoking” of birthright citizenship in the U.S.– in other words another GOP luminary who wants to copy progressive places such as Saudi Arabia and Kuwait, countries that deny citizenship — and even birth certificates — to tens of thousands of children born to foreign workers, rendering them stateless and vulnerable and at risk of a life of official non-existence.

That was the policy Germany followed until 1999, when German law was modified finally to recognize the principle of jus soli (“the right of soil”), replacing the blood connection principle that German citizenship required previously.

Before the modification, children of foreign-born workers in Germany also were rendered stateless – the law hit particularly hard the children born to hundreds of thousands of immigrant Turkish workers and did nothing to assist in integration or the calming of roiled race relations in post-War Germany. Of course, the German neo-Nazi and Aryan fantasists opposed vociferously the change in the law.

Is this German experience what Senators Jon Kyl and Lindsey Graham want to repeat in the U.S.? And are they really content to follow the examples of the Kuwaitis and the Saudis?

I doubt the GOP lawmakers who are pushing for the amending/changing of the 14th amendment – nor for that matter Fox talk-show host Glenn Beck and conservative columnist George Will – are even aware of who they are aligning with overseas when it comes to citizenship rights. American Exceptionalism for them seems to be more of a matter of ignoring the rest of the World and not learning from the mistakes of others. Just bury your head in the sand and look like an oaf.

According to Will, a writer who normally thinks the Constitution should be untouchable, the 14th amendment would never have been passed “If those who wrote and ratified the 14th Amendment had imagined laws restricting immigration — and had anticipated huge waves of illegal immigration.” He added in a column published last March: “Is it reasonable to presume they would have wanted to provide the reward of citizenship to the children of the violators of those laws? Surely not.”

It is odd for Will to apply “common sense” when it comes to the interpretation of the Constitution – it isn’t something he cites when arguing about gun rights, for example. But his history is a tad off: there was mass immigration in the 1860s when the amendment was written and adopted and there was tremendous nativist opposition to the new wave of immigration. So it isn’t at all clear that Will’s presumption is, in fact, at all reasonable.

He rests much of his argument on the writings of Professor Lino Graglia of the University of Texas law school, who maintains that an 1884 Supreme Court decision about children born to Native American parents established that “no one can become a citizen of a nation without its consent.” Well, that is pretty obvious — and the 14th amendment grants birthright citizenship.

But in a law review article, Graglia argues: “This would clearly settle the question of birthright citizenship for children of illegal aliens. There cannot be a more total or forceful denial of consent to a person’s citizenship than to make the source of that person’s presence in the nation illegal.”

And so Will concludes triumphantly: “There is no constitutional impediment to Congress ending the granting of birthright citizenship to those whose presence here is not only without the government’s consent but in violation of its law.”

But there is a big problem with that jump. While the mother may have been in the U.S. illegally – the child has not, unless that is we are going to start demanding passports and visas for babies carried in the womb!

Jesuitical argumentation aside, most sensible nations grant birthright citizenship and they do so because they believe that the idea that a child may be rendered stateless otherwise an appalling idea. But, of course, what is more important in the birthright citizenship debate prompted by some on the American right has more to do with electoral and internal GOP politics than anything else.

The Tea Party and Glenn Beck say jump and the conservatives within the Party ask “how high?” And the more they press on this anti-immigrant front they become the darlings of the far right reaches of America but the further they kick away from the centre – and as the late Republican strategist Lee Atwater would always tell you, the centre is where you win elections.